DAX Index Today: Investors Eye Earnings, PMIs and Labor Market Data

Market Overview

On Wednesday, July 31, the DAX advanced by 0.53%. Following a 0.49% gain on Tuesday, July 30, the DAX closed at 18,509.

Wednesday: DAX Market Movers

• Siemens Energy AG led the gains, jumping 5.90% on new contract news.
• Airbus Group rallied 4.84% on better-than-expected corporate earnings, supporting gains for MTU Aero (+0.77%).
• Infineon Technologies and SAP advanced by 1.42% and 1.56%, respectively.
• Tech stocks trended higher on reports of Dutch company ASML avoiding new US trade rules.

Eurozone Inflation Higher

On Wednesday, July 31, inflation numbers from the Eurozone supported expectations of a September ECB rate cut.

The Eurozone’s annual inflation rate rose from 2.5% in June to 2.6% in July. However, services inflation, a focal point for the ECB, eased from 4.1% in June to 4.0% in July.

Expert Views on Inflation and the ECB Rate Path

Pictet Wealth Management Head of Macroeconomic Research Frederik Ducrozet commented on the inflation numbers,

“Euro area headline and core HICP inflation a touch higher than ECB staff projections in July, at 2.59% and 2.86% respectively, vs 2.5% and 2.7% for Q3 staff projections. Not much to worry about, but will keep the ECB on the cautious side.”

German Stats: Finalized Manufacturing PMIs in Focus

Finalized German Manufacturing PMIs will draw investor interest on Thursday, August 1.

According to the flash survey, the German HCOB Manufacturing PMI fell from 43.5 in June to 42.6 in July. Weaker-than-expected PMI numbers could further impact investor hopes of a manufacturing sector rebound.

Hamburg Commercial Bank Chief Economist Dr. Cyrus de la Rubia commented on the prelim survey, saying,

“This looks like a serious problem. Germany’s economy fell back into contraction territory, dragged down by a steep and dramatic fall in manufacturing output. The hope that this sector could benefit from a better global economic climate is vanishing into thin air.”

FOMC Press Conference

On Wednesday, the Fed left interest rates unchanged, placing the FOMC press conference under the spotlight. Fed Chair Powell delivered a dovish FOMC press conference, supporting expectations of multiple 2024 Fed rate cuts.

Powell also emphasized that US labor market conditions should not deteriorate further.

Expert Views on the Press Conference

Arch Capital Global Chief Economist Parker Ross commented on the FOMC Press Conference, saying,

“Nothing new vs what Powell already shared during his congressional testimony, but now it’s in writing and from the Committee. […]. Sounds like some Committee members pushed for a cut at this meeting, but the consensus didn’t get there.”

The comments should support buyer demand for riskier assets.

US Market Trends

The US equity markets had a positive Wednesday session.

The Nasdaq Composite Index and the S&P 500 rallied 2.64% and 1.58%, respectively, while the Dow gained 0.24%.

US Economic Data: Jobless Claims

US jobless claims will draw investor interest on Thursday. Economists forecast continuing jobless claims will increase from 1,851k in the week ending July 13 to 1,860k in the week ending July 20.

Weaker labor market conditions could raise expectations of multiple 2024 Fed rate cuts. Expectations of a more dovish Fed rate path could fuel buyer demand for rate-sensitive DAX-listed stocks. Lower borrowing costs can increase company profitability.

Other Stats

Other stats include Manufacturing PMI numbers. However, the increased focus on the US labor market could limit the impact of the PMIs on market risk sentiment.

Near-Term Outlook

Near-term DAX trends hinge on corporate earnings, Euro Area PMIs, and US labor market data. Weaker-than-expected PMIs and softer labor market conditions could fuel expectations of multiple Fed and ECB rate cuts. However, corporate earnings and forecasts may also impact market risk appetite.

BMW, Volkswagen, and Daimler Truck Holding are among the big names to release earnings reports on Thursday.

In the futures markets, the DAX and the Nasdaq mini were up by 8 and 162 points, respectively.

Investors should remain vigilant with corporate earnings, economic data, and monetary policy in focus. Monitor the news wires, economic data, and expert commentary to manage trading strategies. Stay up-to-date with our latest news and analysis to manage risk.

DAX Technical Indicators

Daily Chart

The DAX hovered above the 50-day and 200-day EMAs, sending bullish price signals.

A breakout from the Wednesday high of 18,564 would support a move toward the 18,750 handle. A break above the 18,750 handle could signal a move toward 19,000.

Euro area PMIs, corporate earnings, and US labor market data require consideration.

Conversely, a DAX break below the 50-day EMA could signal a drop toward 18,200. A fall through 18,200 would bring 18,000 into view.

The 14-day RSI at 53.48 indicates a DAX break above 18,750 before entering overbought territory.

4-Hourly Chart

The DAX sat above the 50-day and 200-day EMAs, affirming the bullish price signals.

A return to 18,600 would support a move toward the 18,750 handle.

However, a DAX break below the 50-day EMA could give the bears a run at the 200-day EMA.

The 14-period 4-hour RSI at 55.31 indicates a DAX return to 18,750 before entering overbought territory.