DAX Index Today: ECB Insights, US GDP, and Key Earnings

The Overview of the DAX Performance

The DAX declined by 0.27% on Wednesday (April 24). Partially reversing a 1.55% rally from Tuesday (April 23), the DAX ended the session at 18,089.

German Business Sentiment Improved in April

German economic indicators continued to signal an improving macroeconomic environment. The Ifo Business Climate Index increased from 87.9 to 89.4 in April. Sentiment across the manufacturing and services sectors improved markedly, aligned with the recent private sector PMI numbers.

However, ECB commentary impacted buyer demand for DAX-listed stocks. Bundesbank President Joachim Nagel downplayed the chances of a series of interest rate cuts if data supported a June rate cut. President Nagel also expressed concerns about inflation following the release of recent Services PMI data.

US Durable Goods Orders Signaled a Robust US Economy

On Wednesday (April 24), US durable goods orders garnered investor attention. Durable goods orders increased by 2.6% in March after advancing by 0.7% in February. Moreover, core durable goods orders rose by 0.2%. In February, core durable goods orders increased by 0.1%. The upward trends affected investor expectations of a September Fed rate cut, testing buyer demand for riskier assets.

Corporate earnings also needed consideration. Ford (F), Meta (META), and Boeing (BA) were among the big names on the earnings calendar.

On Wednesday, the Dow declined by 0.11%. The Nasdaq Composite Index and the S&P 500 saw gains of 0.10% and 0.02%, respectively.

The Wednesday Market Movers

Deutsche Boerse slid by 4.01%, with Zalando SE ending the session down 3.97%.

Auto and bank stocks had a mixed session.

Volkswagen fell by 1.03%, with Porsche ending the session down 0.32%. Mercedes Benz Group slipped by 0.04%, while BMW advanced by 0.09%.

Commerzbank declined by 0.18%, while Deutsche Bank rose by 0.03%.

Tech stocks had a positive session. Infineon Technologies rallied 5.45%, with SAP gaining 0.40%.

German Consumer Confidence, ECB, and Earnings

On Thursday (April 25), the German GfK Consumer Confidence Indicator will be in focus. Economists forecast the Indicator to increase from -27.4 to -25.9 for May. Upward trends in consumer confidence would signal improving consumer spending trends.

However, investors must consider the sub-components, including income expectations, the willingness to save, and economic expectations. Broad-based gains may challenge investors’ expectations of multiple ECB interest rate cuts after June.

With the German consumer confidence in focus, ECB commentary and reports also need monitoring. ECB Executive Board member Isabel Schnabel is on the calendar to speak. Reaction to recent economic indicators from the euro area and views on interest rate cuts would move the dial. Moreover, the ECB Economic Bulletin will also draw investor interest.

Apart from economic indicators, corporate earnings will be in focus. STMicroelectronics (STM), Schneider Electric (SCHN), Merck & Co (MRK), Hermes International (HRMS), Deutsche Bank (DBK), Delivery Hero (DHER), BNP Paribas (BNPP), BASF (BASFN), and Airbus (AIR) are among the big names to release earnings results.

US GDP and Corporate Earnings

Later in the session, US GDP numbers for Q1 will attract investor attention. Economists forecast the US economy to expand by 2.5% in Q1 2024 after growing by 3.4% in Q4 2023.

Better-than-expected numbers could further influence investor expectations of a September Fed rate cut. A more hawkish Fed rate path could impact buyer demand for DAX-listed stocks.

On the earnings calendar, Alphabet (GOOGL), Caterpillar (CAT), Intel (INTC), and Microsoft (MSFT) are among the big names to release earnings results on Thursday.

Near-Term Outlook

Near-term trends for the DAX will hinge on ECB commentary, corporate earnings, US GDP numbers, and the US Personal Income and Outlays Report. ECB views on the interest rate path beyond June could impact buyer demand for the DAX. Better-than-expected US GDP numbers and sticky inflation could further reduce expectations of a September Fed rate cut.

Nevertheless, corporate earnings could have more impact.

On the Futures markets, the DAX and the Nasdaq mini were down by 12 and 203 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX break above the Wednesday (April 24) high of 18,226 would support a move to the 18,350 handle.

Investors should consider economic indicators from Germany and the US, the ECB, and corporate earnings.

However, a DAX drop below the 18,000 handle would bring the 50-day EMA into play. A fall through the 50-day EMA would give the bears a run at the 17,615 support level.

The 14-day RSI at 54.37 indicates a DAX move to the 18,350 handle before entering overbought territory.

4-Hourly Chart

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

A DAX move to the 18,200 handle would give the bulls a run at the 18,350 handle.

Conversely, breaking below the 50-day EMA could signal a decline to the 17,615 support level and the 200-day EMA. Buying pressure could increase at the 17,615 support level. The 200-day EMA is confluent with the 17,615 support level.

The 14-period 4-hour RSI at 55.82 suggests a move to the 18,350 handle before entering overbought territory.