The DAX index, Germany’s benchmark stock market index, has been on a remarkable upward trajectory. Despite a slight slip of 0.02% on Wednesday, it reached a new all-time high of 18,001. This surge follows a 1.23% rally on Tuesday, indicating a strong bullish sentiment among investors.
However, the key driver behind this uptrend is the positive earnings outlook for 2024. Companies like Zalando SE and Adidas have shown strong performance, with Zalando surging 19.16% on Wednesday.
Another factor contributing to the DAX’s performance is the overall economic outlook. Despite concerns about a possible recession signalled by the Eurozone’s industrial production numbers, investors are hopeful that the European Central Bank (ECB) will provide support.
The ECB’s potential rate cut in H1 2024 could boost demand for DAX-listed stocks, driving their prices higher.ECB Commentary and Its Impact on DAX IndexInvestor attention is closely focused on ECB commentary as speculation mounts regarding a potential rate cut in the first half of 2024.
The recent Eurozone industrial production data, which showed a decline of 3.2% in January, has fueled expectations for an ECB rate cut. ECB Executive Board members, including Frank Elderson, Isabel Schnabel, and Luis de Guindos, are scheduled to speak, providing insights into the central bank’s policy direction.
Any indications of support for a rate cut, particularly in the near term, could significantly influence investor sentiment and demand for DAX-listed stocks. Conversely, a more cautious approach from ECB officials may temper expectations and lead to market volatility.
US Producer Prices and Retail Sales Impact on DAX Index
On the US front, the upcoming release of US producer prices and retail sales figures for February presents another crucial factor for DAX investors to consider. However, the upward trends in producer prices signal a strengthening demand environment, influencing the timeline for a Fed rate cut.
Economists forecast a 1.1% increase in producer prices for February, indicating growing demand pressures. Similarly, retail sales data will provide insights into consumer spending patterns, which are essential for driving inflationary pressures.
A rebound in retail sales, as forecasted, could further support the case for a Fed rate hike, impacting investor sentiment towards DAX-listed stocks. Therefore, the interplay between US economic indicators and monetary policy expectations will play a significant role in shaping the DAX index’s performance in the coming sessions.
German30 (DAX) Price Forecast: Technical Outlook
The German30 (DAX) experienced a slight pullback, closing at 17,942.42, down by 0.29%. The pivotal point for the DAX stands at 17,961, which could signal a change in market sentiment if breached.
Resistance levels lie at 18,038, 18,116, and 18,200, marking potential barriers to an uptrend. Support levels are established at 17,879, 17,794, and 17,709, ready to cushion further declines.
With the RSI at 64, suggesting a market leaning more towards overbought conditions, and the 50-day EMA at 17,653 indicating a general uptrend, the DAX is at a crossroads, with a drop below 17,961 potentially strengthening a bearish outlook.