DAX Index Today: News From the Middle East Sends DAX Futures Down 281 Points

The Overview of the DAX Performance

The DAX advanced by 0.38% on Thursday. After a 0.02% gain on Wednesday, the DAX ended the session at 17,837.

June ECB Rate Cut Bets and Corporate Earnings

Rising bets on a June ECB interest rate cut drove buyer demand for DAX-listed stocks. ECB members aligned in recent sessions, supporting the first ECB interest rate cut since 2019.

Corporate earnings contributed to the session gains.

There were no stats for Germany or the Eurozone to influence market risk sentiment.

US Jobless Claims and Manufacturing Data Support Fed Policy Shift

On Thursday, US jobless claims and the Philly Fed Manufacturing Index supported expectations the US would avoid a recession.

Initial jobless claims remained unchanged at 212k in the week ending April 13. The Philly Fed Manufacturing Index unexpectedly increased from 3.2 to 15.5 in April.

FOMC member John Williams supported patience over cutting interest rates, warning there was no reason to cut interest rates.

On Thursday, the Nasdaq Composite Index and the S&P 500 declined by 0.52% and 0.22%, respectively. The Dow gained 0.06%.

The Thursday Market Movers

Auto stocks found much-needed buyer support. Continental AG rallied 2.58%. BMW and Volkswagen saw gains of 0.94% and 0.74%, respectively. Porsche advanced by 0.71%, with Mercedes Benz Group gaining 0.55%.

Bank stocks were also among the front runners. Investors reacted to a positive outlook from Bankinter. Deutsche Bank and Commerzbank ended the session up 2.04% and 2.49%, respectively.

Adidas extended gains from Wednesday, rallying 2.68% after reporting better-than-expected Q1 earnings results and a rosier outlook for 2024.

However, Infineon Technologies extended its losses from Wednesday, declining by 1.94%. ASML continued to trend lower after reporting weaker-than-expected earnings results.

Sartorius AG was the worst performer, tumbling 15.41% after missing revenue and order expectations.

The Middle East in the Spotlight

On Friday, media reports of an Israeli missile hitting Iran impacted the Asian market session.

However, the Asian equity markets reversed some losses after Reuters reported the explosions were not because of a missile attack.

Mixed reports could keep the markets on edge as the weekend approaches. Iran attacked Israel on Saturday, April 13.

The futures markets reflected the impact of the news on market risk sentiment. On Friday, the Nasdaq mini and DAX were down 171 and 281 points, respectively.

News updates from the Middle East will likely remain the focal point on Friday. Nevertheless, investors should consider economic data from Germany, central bank commentary, and corporate earnings.

German Producer Prices, the ECB, and Corporate Earnings

On Friday, German producer prices could influence the ECB interest rate trajectory. Economists forecast producer prices to decline by 4.2% year-on-year in March. Producer prices fell by 4.1% year-on-year in February.

Forecasts support investor bets on a June ECB rate cut. Producers reduce prices in a weaker demand environment, dampening inflationary pressures.

Following mixed reports from the Middle East, investors should monitor ECB commentary. ECB President Christine Lagarde and Executive Board member Piero Cipollone are attending the IMF/World Bank Spring Meetings. Implications of an escalation in the Middle East need consideration.

Beyond the economic calendar, corporate earnings results will also move the dial.

US Economic Calendar: Fed Speakers in Focus

On Friday, FOMC member speeches need monitoring. FOMC member Austan Goolsbee is on the calendar to speak. Increasing support to delay Fed interest rate cuts until Q4 2024 could impact buyer demand for DAX-listed stocks.

However, there are no stats from the US to consider, leaving corporate earnings in focus. Procter & Gamble (PG) and American Express (AXP) are among the big names to release earnings results.

Near-Term Outlook

Near-term trends for the DAX will hinge on news updates from the Middle East. Confirmations of an Israeli response could leave the markets on tenterhooks going into the weekend.

DAX Technical Indicators

Daily Chart

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

A DAX break above the 18,000 handle would support a move toward 18,200. A return to 18,200 would bring the all-time high of 18,567 into view.

News updates from the Middle East, corporate earnings, producer prices, and central bank commentary need consideration.

However, a break below the 50-day EMA would bring the 17,615 support level into play. A fall through the 17,615 support level could give the bears a run at the 17,500 handle.

The 14-day RSI at 44.65 indicates a DAX fall to 17,500 before entering oversold territory.

4-Hourly Chart

The DAX remained below the 50-day EMA while hovering above the 200-day EMA, affirming the bearish near-term but bullish longer-term price signals.

A DAX break above the 18,000 handle and the 50-day EMA would bring the 18,200 handle into play. Selling pressure could intensify at the 18,000 handle. The 50-day EMA is confluent with 18,000.

Conversely, a fall through the 17,615 support level and the 200-day EMA would bring the 17,500 handle into play.

The 14-period 4-hour RSI at 42.94 suggests a DAX fall to the 17,500 handle level before entering oversold territory.