DAX News Today: German Producer Prices, Euro Area Trade, and 19,000

The Overview of the DAX Performance

The DAX gained 0.35% on Monday (May 20). Reversing a 0.18% loss from Friday (May 17), the DAX ended the session at 18,769.

ECB Interest Rate Trajectory Uncertainty

On Monday (May 20), uncertainty about the post-June ECB rate path limited gains for the session.

Nevertheless, rising investor expectations of a June ECB rate cut remained a tailwind at the start of the week. Investors await preliminary private sector PMI numbers for further clues on inflation trends. The PMI numbers are out on Thursday.

US Fed Speakers Stay Cautious

On Monday, Fed speakers toed the line cautiously after the recent US inflation and retail sales data. FOMC members Michael Barr, Raphael Bostic, Mary Daly, and Philip Jefferson needed more confidence inflation was returning to the target before supporting a Fed rate cut.

Nevertheless, investors remained hopeful of a September Fed rate cut despite the cautious tones. According to the CME FedWatch Tool, the probability of the Fed standing pat in September increased from 35.2% to 38.2% on Monday.

On Monday, the Dow ended the session down 0.49%. However, the Nasdaq Composite Index and S&P 500 saw gains of 0.65% and 0.09%, respectively. Anticipation of Nvidia’s (NVDA) earnings result on Thursday (May 23) drove buyer demand for tech stocks.

The Monday Market Movers

Rheinmetall AG was the best performing stock, rallying 3.75%. Geopolitical tensions in the Middle East contributed to the gains.

SAP and Infineon Technologies advanced by 1.33% and 1.32%, respectively. Tech stocks trended higher before the NVDA earnings release.

However, German auto stocks ended the session in negative territory.

Mercedes Benz Group and BMW saw losses of 1.37% and 1.06%, respectively. Daimler Truck Holding fell by 0.97%, with Volkswagen declining by 1.00. Porsche ended the session down 0.46%. Auto stocks came under selling pressure on news of Morgan Stanley downgrading Volkswagen from equal-weight to under-weight.

German Producer Prices and Eurozone Trade Terms

German producer price figures for April will warrant investor attention early in the Tuesday European session (May 21).

Economists forecast producer prices to fall 3.2% year-on-year after declining 2.9% in March. Producers would reduce prices in a deteriorating demand environment, dampening inflationary pressures.

Weaker-than-expected numbers could raise investor expectations of post-June ECB rate cuts.

Trade data for the Eurozone also need consideration. Economists forecast the trade surplus to narrow from €23.6 billion to €19.9 billion in March. Deteriorating trade terms may also influence the ECB rate path. However, investors must consider the import and export figures.

Amidst rising uncertainty about the post-June ECB rate path, investors should monitor ECB chatter. Support for multiple interest rate cuts could drive buyer demand for DAX-listed stocks.

US Economic Calendar: Fed Speakers Remain in Focus

Later in the Tuesday session, Fed speakers will be in focus for the second successive session. FOMC members Christopher Waller, Thomas Barkin, John Williams, Raphael Bostic, and Michael Barr are on the calendar to speak.

Comments regarding inflation and the Fed interest rate trajectory could influence market risk sentiment. Recent Fed speeches have signaled the need for a higher-for-longer Fed rate path.

Near-Term Outlook

Near-term trends for the DAX will hinge on producer price numbers from Germany and central bank speeches. Softer-than-expected German producer prices and ECB support for post-June ECB interest rate cuts could fuel buyer appetite for DAX-listed stocks.

However, investors should continue monitoring FOMC member chatter. Threats of a Fed rate hike could overshadow dovish ECB tones.

On the Futures markets, the DAX and the Nasdaq mini were down 64 and 14 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX break above 18,800 could give the bulls a run at the May 15 all-time high of 18,893. A breakout from the all-time high could signal a move to the 19,000 handle.

German producer prices, Eurozone trade data, and central bank chatter need investor consideration.

However, if the DAX drops below 18,650, the bears could target the 18,500 handle.

The 14-day RSI at 64.47 indicates a return to the May 15 all-time high before entering overbought territory.

4-Hourly Chart

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

A DAX return to the 18,800 handle would support a move to the all-time high (18,893).

Conversely, a DAX break below the 18,650 handle could bring the 18,500 handle into play.

The 14-period 4-hour RSI at 61.12 indicates a DAX move to the May 15 all-time high before entering overbought territory.