DAX Index: Corporate Earnings, US Consumer Optimism, and the Fed in Focus

Highlights

• The DAX declined by 0.77% on Friday, ending the session at 15,234.
• A hawkish Fed Chair Powell speech from Thursday left the DAX in negative territory on Friday.
• On Monday, corporate earnings, US consumer optimism, and the Fed will be the focal points.

Friday DAX Overview

The DAX declined by 0.77% on Friday. After a 0.81% gain on Thursday, the DAX ended the day at 15,234.

ECB President Lagarde Delivers ECB Policy Uncertainty

On Friday, ECB President Lagarde warned of a likely pickup in inflationary pressure at the turn of the year. However, Lagarde suggested that the ECB could avoid another rate hike, saying,

“We are at a level where we believe that, if kept long enough – and this long enough is not trivial – will take us to the 2% medium-term target.”

The comments will likely increase DAX sensitivity to ECB commentary over the near term. Hints of another rate hike could impact the appetite for DAX-listed stocks.

There were no economic indicators for Germany or the Eurozone for investors to consider on Friday.

Fed Chair Powell Sends the DAX into Negative Territory

Fed Chair Powell sent the DAX into negative territory on Friday. In an overnight speech on Thursday, the Fed Chair delivered a hawkish speech, sending 10-year US Treasury yields to a session high of 4.654%. The US equity markets responded to the hawkish comments, ending the Thursday session with losses.

On Thursday, the Dow fell by 0.65%, with the Nasdaq Composite Index and S&P 500 seeing losses of 0.94% and 0.81%, respectively.

The Friday Market Movers

Zalando SE and Bayer tumbled by 4.16% and 3.95%, respectively, with Siemens Energy AG ending the session down 3.00%.

The threat of a Fed rate hike and a more hawkish ECB interest rate trajectory likely contributed to the Zalando SE losses. A higher inflation environment and a hawkish ECB rate path may impact consumer spending.

News of Bayer considering a restructuring and possible break up of the consumer and agricultural segments may have affected the Bayer stock price.

Siemens Energy AG likely came under pressure as investors locked in profits amid the negative mood across the equity markets.

Commerzbank led the way, gaining 1.28%, with earnings results from Wednesday resonating.

Corporate Earnings Puts the Auto Sector in the Spotlight

On Monday, Porsche will release earnings results that will likely impact the broader auto sector. Beyond the earnings, the earnings outlook will draw investor attention amid a weak demand environment.

There are no economic indicators for Germany or the Eurozone to influence investor sentiment.

However, investors must monitor ECB commentary and 10-year US Treasury yield trends.

US Consumer Optimism and the Fed in the Spotlight

Later in the Monday session, the IBD/TIPP Economic Optimism Index needs consideration. An unexpected fall in consumer optimism toward the US economy may impact market risk sentiment. Economists predict the Index to climb from 36.3 to 40.2 in November. Index levels below 50 reflect consumer pessimism toward the US economy.

Waning consumer sentiment and optimism could reignite fears of a Fed-induced hard landing.

Away from the numbers, FOMC voting member Lisa Cook will speak. Hawkish forward guidance on the Fed interest rate path would align with Fed Chair Powell and may weigh on riskier assets.

The futures markets point to a negative start to the Monday session. The DAX and the Nasdaq mini were down 8 and 82 points, respectively.

Short-Term Forecast

Near-term trends for the DAX will likely hinge on US inflation figures out on Tuesday and Eurozone GDP (Tues) and inflation numbers (Fri). However, sticky US inflation and hawkish Fed rhetoric could be sufficient to impact the appetite for riskier assets.

DAX Technical Indicators

Daily Chart

The DAX remained below the 50-day and 200-day EMAs, sending bearish price signals.

A DAX fall below the 15,200 handle would bring sub-15,000 and the 14,957 support level into view.

Fed commentary, US Consumer Optimism, and corporate earnings will influence investor sentiment.

However, a break above the 15,247 resistance level and 50-EMA would support a move to the 200-day EMA.

The 14-day RSI reading of 53.98 indicates a DAX move to the 200-day EMA before entering overbought territory.

4-Hourly Chart

The DAX holds above the 50-day EMA while remaining below the 200-day EMA, sending bullish near-term but bearish longer-term price signals.

A DAX break above the 15,247 resistance level would support a move to the 200-day EMA.

However, failure to break above the 15,247 resistance level would leave the 50-day EMA in play. A drop below the 50-day EMA would bring the 14,957 support level into view.

The 58.28 14-4 hour RSI signals a DAX move to the 200-day EMA before entering overbought territory.

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