DAX Index Today: China Stats, the Middle East, the Fed, and a 200 Point Slide

The Overview of the DAX Performance

The DAX advanced by 0.54% on Monday. Reversing a 0.13% loss from Friday, the DAX ended the session at 18,027.

Eurozone Industrial Production Supported an Improving Outlook

On Monday, economic indicators for the Eurozone drew investor interest. Industrial production across the euro area increased by 0.8% in February after sliding by 3.0% in January. Economists forecast industrial production to advance by 0.8%.

The numbers aligned with expectations of an improving macroeconomic environment. Friday’s Survey of Professional Forecasters predicted an improvement in economic activity throughout 2024.

US Economic Calendar: Impact of US Retail Sales on 2024 Fed Rate Cut Bets

On Monday, US retail sales figures for March further impacted investor bets on 2024 Fed rate cuts. Retail sales increased by 0.7% after rising by 0.9% in February. Economists forecast retail sales to increase by 0.3%.

10-year US Treasury yields responded to the numbers, rising by 1.77% to end the session at 4.606%.

On Monday, the Nasdaq Composite Index slid by 1.79%. The Dow and the S&P 500 declined by 0.65% and 1.20%, respectively. Concerns about an escalation in the Middle East contributed to the losses.

The Monday Market Movers

Adidas surged 4.18% as investors reacted to a Morgan Stanley (MS) upgrade from underweight to overweight. Online retailer Zalando SE advanced by 1.28%.

Geopolitical tensions continue to drive buyer demand for Rheinmetall AG, which increased by 1.58%.

Infineon Technologies and SAP ended the session up 0.89% and 0.35%, respectively.

However, auto stocks had a mixed start to the week. BMW and Mercedes Benz Group saw gains of 0.18% and 1.15%, respectively. Volkswagen and Porsche ended the day down 0.32% and 0.12%, respectively.

Economic Data from China Sent the Asian Markets Deeper into the Red

Ahead of the Tuesday European session, economic indicators from China influenced market risk sentiment. First-quarter GDP numbers beat forecasts. However, retail sales and industrial production numbers signaled a loss in momentum at the end of Q1.

Economic Sentiment and Eurozone Trade Terms in Focus

On Tuesday, German wholesale prices, ZEW Economic Sentiment numbers for Germany and the Eurozone, and trade data for the Eurozone will garner investor interest.

Economists forecast wholesale prices to fall 2.0% year-on-year in March after declining 3.0% in February. A less marked decline could signal an improving demand environment. Nevertheless, a less marked fall will unlikely force the ECB to reconsider its plans to cut interest rates in June.

Economists expect the German ZEW Economic Sentiment Index to increase from 31.7 to 35.1 in April. Better-than-expected figures could drive buyer demand for DAX-listed stocks.

Forecasts for Eurozone trade data are also market-friendly. Economists expect the Eurozone trade surplus to widen from €11.4 billion to €17.9 billion in February.

US Economic Calendar: US Housing Sector and Industrial Production

On Tuesday, US housing sector data for March will draw investor attention. Economists expect housing starts and building permits to decline in March. However, investors should consider trends rather than monthly movements in isolation.

Better-than-expected numbers could further reduce investors bets on 2024 Fed rate cuts. Housing services-related inflation remains a bugbear for the Fed.

Industrial production figures will also need consideration, with investors looking for cracks in the US economy.

Beyond the economic calendar, investors should monitor news updates from the Middle East and Fed chatter. On the earnings calendar, Morgan Stanley (MS), Bank of New York Mellon (BK), Bank of America (BAC), and Johnson and Johnson (JNJ) are among the big names to release earnings results.

Near-Term Outlook

Near-term trends for the DAX will likely hinge on corporate earnings and central bank forward guidance. However, an escalation in the Middle East would overshadow market-friendly economic indicators and earnings results.

In futures trading, the DAX and the Nasdaq Mini declined by 207 and 50 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX move to the 18,200 handle could give the bulls a run at the 18,350 handle. A breakout from the 18,350 handle would support a move to the April 2 all-time high of 18,567.

The economic indicators, central bank chatter, corporate earnings, and the Middle East need consideration.

However, a drop below the 50-day EMA could give the bears a run at the 17,615 support level.

The 14-day RSI at 50.57 suggests a DAX return to the all-time high before entering overbought territory.

4-Hourly Chart

The DAX sat below the 50-day EMA while remaining above the 200-day EMA, confirming the bearish near-term but bullish longer-term price trends.

A break above the 50-day EMA would give the bulls a run at the 18,500 handle.

Conversely, a fall through the 17,750 handle would bring the 17,615 support level into play.

The 14-period 4-hour RSI at 45.52 indicates a DAX fall to the 17,615 support level before entering oversold territory.