DAX Index Today: Euro Area Economic Sentiment, the ECB, US Data in Focus

Overview of the DAX Performance on Monday

The DAX declined by 0.02% on Monday. After a 0.03% loss on Friday, the DAX ended the session at 17,933. Significantly, the DAX held onto the 17,900 handle despite a four-day losing streak.

China Economic Indicators Beat Forecasts

On Monday, better-than-expected economic indicators from China drove buyer demand for riskier assets. Industrial production and fixed asset investments were higher year-on-year. Retail sales beat forecasts. However, the unemployment rate unexpectedly increased from 5.1% to 5.3% in February.

Nonetheless, the numbers signaled an improving macroeconomic environment.

Eurozone Inflation Signaled Weaker Demand

On Monday, finalized inflation numbers for the Eurozone drew investor interest. The annual inflation rate eased from 2.8% to 2.6% in February, in line with preliminary figures.

The services sector remained the main contributor to inflation.

In January, the Eurozone trade surplus narrowed from €16.8 billion to €11.4 billion. However, the trade terms improved markedly compared with January 2023. Exports from the rest of the world were up 1.3% compared with January 2023. Imports from the rest of the world were down 16.1%.

The DAX retreated on the improvement in trade terms and moderately softer inflationary pressures.

NAHB Housing Market Index and Fed Rate Cut Bets Contribute to Reversal

On Monday, better-than-expected US housing market data further pressured the DAX. The NAHB Housing Market Index increased from 48 to 51 in March. Economists view the housing market as a litmus test for the US economy.

An improving housing market could fuel consumer confidence, spending, and demand-driven inflation. According to the CME FedWatch Tool, the chances of a 25-basis point June Fed rate cut decreased from 55.2% to 50.7%.

10-year US Treasury yields increased by 0.32%, ending the day at 4.324%. However, the US markets ignored rising yields and falling bets on an H1 2024 Fed rate cut. On Monday, the Dow ended the day up 0.20%. The Nasdaq Composite and S&P 500 saw gains of 0.82% and 0.63%, respectively.

The Monday Market Movers

Auto stocks were among the front runners. Porsche rallied 2.26%, with Volkswagen gaining 1.44%. Mercedes Benz Group and BMW ended the session up 0.36% and 0.28%, respectively.

Vonovia recovered some of the losses from Friday, gaining 3.13%. The German real estate firm reported its largest-ever loss in 2023, sending the share price down 10.07% on Friday.

Tech stocks also limited the downside. Infineon Technologies and SAP ended the day up 0.28% and 0.17%, respectively.

However, Adidas slid by 2.39%, with bank stocks ending the session in negative territory. Commerzbank and Deutsche Bank declined by 0.38% and 0.90%, respectively.

German and Eurozone Economic Sentiment in the Spotlight

On Tuesday, ZEW Economic Sentiment figures for Germany and the Eurozone need investor consideration. Improving sentiment toward the German and Eurozone economies could support demand for DAX-listed stocks.

Economists forecast the German ZEW Economic Sentiment Index to rise from 19.9 to 20.5 in March. Moreover, economists predict the Eurozone ZEW Economic Sentiment Index to increase from 25.0 to 28.0 in March.

Beyond the numbers, ECB commentary also warrants investor attention. ECB Executive Board member Luis de Guindos is on the calendar to speak. Views on inflation, the economic outlook, and the timeline for an ECB rate cut would move the dial. The markets are betting on a June ECB rate cut.

US Economic Calendar: US Housing Sector in the Spotlight

On Tuesday, US housing sector data will garner investor attention. Building permits and housing start numbers for February could influence sentiment toward the US economy. Economists consider the housing sector a leading indicator of the US economy.

Economists forecast building permits to decline by 0.2% and housing starts to increase by 7%. In January, building permits and housing starts fell by 0.3% and 14.8%, respectively.

Short-term Forecast

Near-term trends for the DAX will hinge on euro area economic indicators and the Fed interest rate decision.

Better-than-expected euro area data could drive buyer demand for DAX-listed stocks. However, a less dovish Fed rate path could pressure riskier assets.

In the futures, the DAX and Nasdaq mini were down 47 and 43 points, respectively.

DAX Technical Indicators

Daily Chart

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

A breakout from the March 14 all-time high of 18,039 could support a move toward the 18,200 level.

Economic data from the euro area, ECB chatter, and US housing sector data need investor consideration.

However, a fall through the 17,900 handle could give the bears a run at the 17,750 handle.

The 14-day RSI at 74.47 shows the DAX in overbought territory. Selling pressure could intensify at the March 14 high of 18,039.

4-Hourly Chart

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

A DAX return to the all-time high of 18,039 would bring the 18,200 handle into play.

Conversely, a drop below the 17,900 handle could signal a fall to the 50-day EMA.

The 14-period 4-hour RSI at 57.58 indicates a DAX move to the March 14 all-time high of 18,039 before entering overbought territory.