DAX News Today: German Inflation in Focus after Upbeat China CPI Numbers

Market Overview

On Thursday, August 8, the DAX rose by 0.37%, following a 1.50% rally on Wednesday, August 7. The DAX closed at 17,680.

Thursday: DAX Market Movers

• Siemens AG advanced by 2.09% on upbeat earnings reports.
• Allianz and Deutsche Telekom rose by 1.89% and 1.88%, respectively, on upbeat quarterly earnings results.

German Economic Calendar

On Friday, August 9, finalized inflation numbers from Germany will draw investor interest. An upward revision of the preliminary annual inflation number could test investor bets on multiple 2024 ECB rate cuts.

According to the preliminary report, the annual inflation rate rose from 2.2% in June to 2.3% in July.

A less dovish ECB rate path could strengthen the EUR, possibly impacting the profitability of export-focused companies. Furthermore, higher borrowing costs could also affect company earnings.

Expert Views on the German Inflation

Pictet Wealth Management Head of Macroeconomic Research Frederik Ducrozet commented on the June National Central Bank macro projections, stating,

“We just got the macro projections from euro National Central Banks. In June and in December, ECB projections are produced jointly by NCBs and ECB staff. The upward revision to 2025 inflation projections has been almost entirely driven by Germany, the Netherlands, and Belgium.”

Higher inflation figures from Germany could complicate the ECB’s monetary policy goals.

Corporate Earnings

On Friday, Rheinmetall AG will release earnings reports. The report and forward guidance may influence DAX trends ahead of the US session.

US Jobless Claims

On Thursday, August 8, US jobless claims data boosted buyer demand for US and DAX-listed stocks. Initial jobless claims fell from 250k in the week ending July 27 to 233k in the week ending August 3.

Tighter US labor market conditions could increase wage growth and disposable income, driving consumer spending. Contributing over 60% to the US economy, a pickup in consumer spending would ease recessionary jitters.

US Market Trends

On Thursday, August 8, the US equity markets reversed their losses from the previous session. The Nasdaq Composite Index jumped by 2.87%, while the Dow and the S&P 500 rallied by 1.76% and 2.30%, respectively.

Expert Views on the US Labor Market

Wall Street Journal Chief Economics Correspondent Nick Timiraos commented on the jobless claims data, stating,

“Initial claims for unemployment benefits dropped to a seasonally adjusted 233,000 last week, arresting fears that the U.S. labor market is imminently weakening. Claims continue to run close to their year-earlier and the 2018-19 levels.”

Arch Capital Global Chief Economist Parker Ross highlighted differences between the initial and continuing jobless claims, saying,

“Recall that initial claims are flows into unemployment, while continuing claims are a reflection of how many people are unemployed. Flows (i.e. layoffs) have been relatively normal for most of 2024, but unemployed workers are taking longer to find a new job, which is reflected in the much higher level of continuing claims vs initial claims relative to recent non-COVID norms.”

US Economic Calendar

On Friday, investors should monitor FOMC member chatter. Views on the economy, labor market, and Fed rate path could influence buyer demand for DAX-listed stocks.

Near-Term Outlook

Near-term DAX trends hinge on corporate earnings, German inflation numbers, and central bank commentary. An upward revision to preliminary German inflation could test investor bets on multiple 2024 ECB rate cuts and buyer demand for DAX-listed stocks. Investors should also monitor USD/JPY trends, as a drop below 145 could possibly fuel fears of another Yen carry trade unwind.

In the futures markets, the DAX was up 20 points, while the Nasdaq mini was down by 31 points.

Earlier today, better-than-expected inflation numbers from China signaled a pickup in demand, contributing to gains in the Asian markets. The risk-on mood will likely set the tone for Friday’s European session.

Investors should remain vigilant with corporate earnings and German inflation in focus. Monitor the news wires, the economic calendar, 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 200-day EMA while remaining below the 50-day EMA, affirming bearish near-term but bullish longer-term price signals.

A breakout from 17,750 could give the bulls a run at 18,000. A return to 18,000 may support a move toward the 50-day EMA.

Corporate earnings, German inflation, and central bank commentary require consideration.

Conversely, a DAX break below the 17,615 support level and the 200-day EMA could bring the 17,003 support level into play.

The 14-day RSI at 39.71 suggests a DAX drop to the 17,003 support level before entering oversold territory.

4-Hourly Chart

The DAX remained well below the 50-day and 200-day EMAs, confirming the bearish price trends.

A break above 17,750 could signal a move toward the 50-day EMA.

However, a DAX break below the 17,615 support level could bring the 17,003 support level into play.

The 14-period 4-hour RSI at 44.84 indicates a DAX drop to the 17,003 support level before entering oversold territory.