The DAX declined by 0.22% on Friday, closing the session at 16,927.
On Monday, the ECB will continue to influence DAX trends.
Corporate earnings and Fed speakers also need consideration.
Overview of the DAX Performance on Friday
The DAX declined by 0.22% on Friday. Partially reversing a 0.25% gain from Thursday, the DAX ended the Friday session at 16,927.
German Inflation Softened in January
On Friday, finalized German inflation figures drew investor interest. The annual inflation rate softened from 3.7% to 2.9% in January, aligned with preliminary numbers. Softer inflation numbers from Germany could support bets on an April ECB rate cut. However, the upside for the DAX was short-lived.
Corporate earnings impacted buyer demand for DAX-listed stocks. Investors reacted to weaker-than-forecast fourth-quarter L’Oreal sales figures from Thursday. However, Hermes International cushioned the downside for the DAX. Annual revenue reportedly surged 21% in Q4.
German government bond yields pressured the DAX as the markets considered recent ECB speeches. Warnings about cutting rates too early pushed yields higher.
There were no US economic indicators for investors to consider on Friday. However, 10-year US Treasury yields nudged higher, influencing market risk sentiment.
On Friday, the Dow declined by 0.14%. The S&P 500 and the Nasdaq Composite saw gains of 1.25% and 0.57%, respectively.
The Friday Market Movers
Infineon Technologies and Rheinmetall AG were the front-runners, gaining 1.48% and 1.36%, respectively. The Nasdaq continued to drive demand for tech stocks. Geopolitical risks and Saab sales growth targets contributed to gains for Rheinmetall AG.
Bank stocks had a mixed session. Deutsche Bank slipped by 0.12%, while Commerzbank gained 1.12%. A UBS downgrade of BNP Paribas from Buy to Neutral failed to spook investors.
Auto stocks also had a mixed session as the effects of better-than-expected Ford Motor Co. (F) earnings faded. BMW and Porsche rose by 0.04% and 0.17%, respectively. Mercedes-Benz Group and Volkswagen fell by 0.18% and 0.13%, respectively.
The Monday Session: The ECB and Corporate Earnings
On Monday, the ECB will be under the spotlight. Continued warnings about cutting interest rates too early could influence government bond yields. An upward trend in government bond yields may pressure buyer demand for DAX-listed stocks.
ECB Chief Economist Philip Lane is on the calendar to speak. Executive Board members Piero Cipollone and Claudia Bach will also deliver speeches. Views on inflation, the economic outlook, and the timeline for interest rate cuts would move the dial.
Investors must consider earnings releases from Germany and broader Europe.
There are no euro area or US economic data for investors to consider on Monday.
However, investors must continue to monitor Fed commentary and US corporate earnings. Avis Budget Group Inc. (CAR) and The Goodyear Tire & Rubber Company (GT) are among the big names to release earnings.
FOMC member Michelle Bowman will speak late in the European session.
Central bank forward guidance, inflation trends, and corporate earnings will continue to influence near-term trends for the DAX. A push to delay ECB and Fed interest rate cuts and hotter-than-expected inflation numbers could pressure the DAX. However, corporate earnings will also need consideration.
On Monday, the DAX futures were up 40 points, while the Nasdaq mini was down 8 points.
DAX Technical Indicators
The DAX held well above the 50-day and 200-day EMAs, sending bullish price signals.
A DAX break above the all-time high of 17,050 would give the bulls a run at 17,100.
On Monday, the ECB and corporate earnings need consideration.
However, a fall through the 16,850 handle would bring the 16,750 handle into play.
The 14-day RSI at 57.35 indicates a DAX break above the ATH of 17,050 before entering overbought territory.
DAX 120224 Daily Chart
The DAX remained above the 50-day and 200-day EMAs, affirming bullish price signals.
A DAX return to the all-time high of 17,050 would bring 17,100 into view.
However, a break below the 50-day EMA would support a fall to the 16,750 handle.
The 14-period 4-hour RSI at 50.45 suggests a DAX move to 17,100 before entering overbought territory.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.