DAX Index Today: Market Reaction to US Labor Data and Factory Orders

The Overview of the DAX Performance

The DAX advanced by 0.60% on Monday (June 3). Following a 0.01% gain on Friday (May 31), the DAX ended the session at 18,608.

Manufacturing PMI Numbers from China Set the Tone

On Monday, China Caixin Manufacturing PMI numbers for May set the tone for the European session. The Caixin Manufacturing PMI increased from 51.4 to 51.7. Economists forecast a PMI of 51.5.

The upbeat numbers contrasted with the NBS survey-based figures, driving demand for riskier assets.

German and Eurozone Manufacturing PMIs Signal Improving Demand Environment

The German Manufacturing PMI increased from 42.5 to 45.4 in May, in line with the preliminary PMI of 45.4.

Additionally, the Eurozone Manufacturing PMI rose from 45.7 to 47.3, down from a flash PMI of 47.4.

The less marked contraction across the manufacturing sector signaled an improving macroeconomic environment supporting buyer appetite for DAX-listed stocks.

However, the numbers will likely have a limited impact on the ECB interest rate path. Wage growth, the services sector, and inflation remain the focal points.

US ISM Manufacturing PMI

Later in the Monday session, US manufacturing sector data also warranted investor attention.

The more influential ISM Manufacturing PMI decreased from 49.2 to 48.7 in May. Economists forecast a PMI of 49.8. The PMIs raised investor bets on a September Fed rate cut, sinking 10-year US Treasury yields by 2.44% on Monday.

However, it was a mixed start to the week for the US equity markets. The Dow fell by 0.30%, while the Nasdaq Composite Index and S&P 500 advanced by 0.56% and 0.11%, respectively.

The Monday Market Movers

Siemens Energy AG rallied 2.33%, with SAP and Infineon Technologies advancing by 1.39% and 0.26%, respectively. Anticipation of an ECB rate cut and rising bets on a September Fed rate cut influenced price trends.

Retail-linked stocks also ended the Monday session in positive territory. Zalando SE and Adidas saw gains of 0.66% and 0.60%, respectively.

However, auto stocks had a mixed session. Porsche and Mercedes Benz Group declined by 0.16% and 0.11%, respectively. Volkswagen fell by 0.04%, while BMW rose by 0.09%.

German Unemployment and Eurozone Consumer Inflation Expectations

Unemployment figures from Germany will draw investor interest early in the Tuesday session (June 4).

Economists forecast unemployment to increase from 2.732 million to 2.880 million in May. Nevertheless, economists expect the unemployment rate to remain unchanged at 5.9%. Deteriorating labor market conditions could support investor bets on multiple 2024 ECB rate cuts.

Additionally, Eurozone consumer inflation numbers for April also need consideration. Economists expect consumer inflation expectations to fall from 3.0% to 2.8%. Softer inflation expectations could fuel investor expectations of multiple post-June ECB rate cuts as the ECB interest rate decision looms.

US Labor Market Data and the Fed Rate Path

Later in the Tuesday session, the all-important US JOLTs Job Openings Report will garner investor interest.

Economists expect job openings to fall from 8.488 million to 8.350 million in April. Furthermore, economists predict job quits to decline from 3.329 million to 3.200 million.

A marked decline in job openings could signal a deteriorating labor market environment. Additionally, a sharp fall in job quits would suggest an unwillingness to leave jobs over concerns about finding new work.

Softer labor market conditions could support a September Fed rate cut and buyer appetite for riskier assets.

Other stats include US factory orders. However, the labor market data will likely be the focal point.

Near-Term Outlook

Near-term trends for the DAX will hinge on Services PMIs, the ECB press conference, and the US Jobs Report. A more hawkish-than-expected ECB outlook on interest rates and better-than-expected economic data could impact buyer demand for DAX-listed stocks.

On the Futures markets, the DAX was down 42 points, while the Nasdaq mini was up by 1 point.

DAX Technical Indicators

Daily Chart

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

A DAX return to the 18,650 handle could give the bulls a run at 18,800.

Consumer inflation expectations and labor market data need investor consideration.

However, a DAX break below 18,400 could signal a drop toward the 50-day EMA.

The 14-day RSI at 54.96 indicates a return to 18,800 before entering overbought territory.

4-Hourly Chart

The DAX hovered above the 50-day and 200-day EMAs, confirming the bullish price trends.

A DAX breakout from 18,650 could give the bulls a run at the 18,800 handle.

Conversely, a DAX fall through the 18,400 handle could signal a drop toward the 18,200 handle.

The 14-period 4-hour RSI at 51.15 indicates a DAX rise to the 18,800 handle before entering overbought territory.