DAX Index: ECB President Lagarde and Eurozone Inflation in Focus Pre Fed Speakers

Highlights

• The DAX gained 0.24% on Thursday, ending the session at 15,787.
• Corporate earnings contributed to session gains.
• On Friday, ECB President Lagarde, Eurozone inflation figures, and Fed speakers will be in focus.

Thursday DAX Overview

The DAX gained 0.24% on Thursday. Following a 0.86% rise on Wednesday, the DAX ended the day at 15,787.

China Housing Sector Tests Buyer Appetite

Housing sector numbers from China impacted renewed optimism toward the Chinese economy. Falling house prices and weak property investment raised concerns about the ongoing impact on the broader Chinese economy and demand.

ECB President Lagarde Discusses Funding Costs and Bank Profitability

On Thursday, ECB President Christine Lagarde discussed the impact of higher funding costs on Bank profits, saying,

“Bank profitability will be adversely affected by the rise in funding costs, reflecting higher policy rates, and by much lower lending volumes. And the enduring combination of low growth and higher debt servicing costs will continue to strain vulnerable households and firms, which could see NPLs rising.”

There were no references to monetary policy to influence investor appetite for riskier assets.

US Economic Data and Fed Speakers

On Thursday, Fed speakers and US stats were in focus later in the European session. A larger-than-expected rise in jobless claims and weak industrial production numbers tested market bets on a soft landing.

FOMC voting member Lisa Cook warned of no guarantee for a soft landing. Cook noted that some parts of the economy struggle with tighter financial conditions.

On Thursday, the Dow fell by 0.13%, while the Nasdaq Composite Index and S&P 500 saw gains of 0.07% and 0.12%, respectively.

The Thursday Market Movers

Siemens AG rallied 5.70% on better-than-forecasted quarterly earnings. Infineon Technologies was also among the front-runners, gaining 1.16%. Investors continued to respond to the Wednesday earnings release.

However, concerns about China and global demand weighed on the auto sector. BMW and Porsche declined by 2.08% and 1.63%, with Daimler Truck Holding (-1.60%), Volkswagen (-1.49%), and Mercedes Benz Group (-1.26%) also struggling.

Siemens Energy AG fell by 2.60% as investors locked in profits, with Zalando SE down 4.60% on consumer demand fears.

Eurozone Inflation in the Spotlight

On Friday, Eurozone inflation numbers for October will draw investor interest. Revisions to preliminary numbers will influence market sentiment toward ECB policy goals and the DAX.

According to preliminary numbers, the Eurozone annual inflation rate softened from 4.3% to 2.9% in October. Downward revisions could allow the ECB to begin discussing interest rate cuts earlier.

With inflation in the spotlight, ECB President Lagarde is also on the calendar to speak.

US Housing Sector and Fed Speakers in the Spotlight

Later in the Friday session, the US housing sector numbers will be in focus. However, barring a marked tumble in building permits and housing starts, the stats should have a limited impact on the DAX.

Fed speakers could influence sentiment toward the Fed interest rate path. FOMC members Michael Barr, Austan Goldsbee, and Mary Daly are on the calendar to speak.

Reaction to the US inflation and retail sales figures would move the dial. Hawkish comments could impact buyer demand for DAX-listed stocks.

The futures markets point to a mixed start to the Friday session. The DAX was up 41 points, while the Nasdaq mini was down 4 points.

Short-Term Forecast

ECB and Fed commentary will likely dictate near-term trends for the DAX. Softer inflation numbers and dovish forward guidance would be tailwinds. However, euro area economic woes may continue to cap the upside.

DAX Technical Indicators

Daily Chart

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

A DAX return to 15,850 would support a move to the 16,004 resistance level.

Central bank commentary and Eurozone inflation will be the focal points. Hawkish Fed chatter and upward revisions to Eurozone inflation numbers could pressure the DAX.

A fall through the 15,694 support level would give the bears a run at 15,500 and the 15,477 support level.

The 14-day RSI reading of 69.41 suggests a DAX return to 15,800 before entering overbought territory.

4-Hourly Chart

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

A DAX break above the 15,800 handle would support a move to the 16,004 resistance level.

However, a fall through the 15,694 support level would bring 15,500 and the 15,477 support level into play.

The 79.29 14-4 hour RSI shows the DAX in overbought territory. Selling pressure will likely intensify at 15,800.

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