DAX in the Hands of German Factory Orders and US Economic Indicators

It was a bullish Tuesday session. The DAX rose by 0.14% to end the day at 15,604.

Economic indicators from Germany provided early support, while investor angst over the likely impact of the OPEC supply cut on inflation weighed. However, US economic indicators dragged the Index back from session highs.

On Tuesday, the NASDAQ Composite Index fell by 0.52%, with the Dow Jones ending the day with a 0.59% loss.

Economic Indicators Flash Red

On Tuesday, German trade data drew interest. In February, the German trade surplus narrowed from €16.7 billion to €16.0 billion versus a forecasted €17.0 billion. According to Destatis,

• Exports increased by 4.0% from the previous month, while imports rose by 4.6%.
• Germany exported €136.7 billion worth of goods while importing €120.7 billion in February.
• Exports to EU member states rose by 2.0%, while imports jumped by 5.1%.
• German exports to euro area countries increased by 1.6%, while imports rose by 3.3%.
• Trade data with non-EU countries was upbeat, with exports surging by 6.6% and imports up 4.0%.
• Notably, export to the US increased by 9.4%, with exports to China rising by 10.2%.

Following the German manufacturing PMI decline in March, the devil was in the details. While the trade surplus narrowed, strong exports and imports were bullish signals.

However, US economic indicators weighed on investor sentiment. A fall in the US JOLTs job openings from 10.563 million to 9.931 million soured the mood. Job openings last sat at sub-10 million in May 2021.

The latest numbers reflected the impact of Fed monetary policy moves on the US economy, with the ISM Manufacturing PMI numbers on Monday also disappointing.

In March, the ISM Manufacturing PMI fell from 47.7 to 46.3. Sub-components of the PMI drew interest, with the employment sub-index sliding from 49.1 to 46.9 and the prices sub-index falling from 51.3 to 49.2.

The Market Movers

It was a mixed Tuesday for the auto sector. Volkswagen and Porsche fell by 0.37% and 0.30%, respectively, with Continental ending the session down 0.78%. However, BMW and Daimler bucked the trend, rising by 0.60% and 0.04%, respectively.

It was also a mixed session for the banks. Commerzbank rose by 0.87%, while Deutsche Bank fell by 1.45%.

The Day Ahead for the DAX

It is a busy day ahead on the economic calendar. German factory orders will be in focus early in the session. Following the trade data from Tuesday, the numbers will need to beat forecasts to deliver support. Economists forecast a 0.3% increase in February.

Later in the session, euro area member states and the Eurozone service and composite PMI numbers will also influence. Germany and the Eurozone’s PMI numbers should have the most impact.

Investors should also consider ECB member speeches, with the economic calendar on the busier side. ECB Chief Economist Philip Lane will lecture at the University of Cyprus today.

DAX Technical Indicators

The DAX has to move through the 15,647 pivot to target the First Major Resistance Level (R1) at 15,694 and the Tuesday high of $15,737. A return to 15,650 would signal a bullish session. However, the DAX would need euro area and US economic indicators to support a bullish session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $15,783. The Third Major Resistance Level (R3) sits at 15,919.

Failure to move through the pivot would leave the First Major Support Level (S1) at 15,558 in play. However, barring a flight to safety, the DAX should avoid sub-$15,500. The Second Major Support Level (S2) at 15,511 should limit the downside. The Third Major Support Level (S3) sits at 15,375.

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The DAX sits above the 50-day EMA (15,339). After last Thursday’s bullish cross, the 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the Major Support Levels and the 50-day EMA (15,339) would support a breakout from R1 (15,694) to give the bulls a run at R2 (15,783). However, a risk-off event would deliver a fall through S1 (15,558) to bring S2 (15,511) into play. A fall through the 50-day (15,339) would signal a near-term bullish trend reversal.

The DAX Futures Sees Red

Looking at the futures markets, DAX was down 19 points, with the NASDAQ mini falling by 1.25. However, the Dow mini was up by 13 points.

For a look at the economic events, check out our economic calendar.