DAX Index: Euro Area PMIs Steal the Spotlight for DAX – What to Expect

Highlights

• The DAX gained 0.36% on Wednesday, ending the session at 15,958.
• Investors responded favorably to the FOMC Meeting Minutes.
• On Thursday, preliminary private sector PMIs for November will be focal points.

Wednesday DAX Overview

The DAX gained 0.36% on Wednesday. After slipping by 0.01% on Tuesday, the DAX ended the day at 15,958.

FOMC Meeting Minutes and US Stats Deliver Support

On Wednesday, the DAX and the broader European equity markets responded favorably to the overnight FOMC Meeting Minutes. There were no surprises, with 10-year US Treasury yields falling 0.66% to end the Tuesday session at 4.395%.

There were no euro area stats to affect the appetite for DAX-listed stocks. However, the ECB Financial Stability Review garnered investor interest. The review raised concerns about credit appetite and credit performance across the banking sector. A downward trend in loan demand and an uptrend in non-performing loans (NPLs) would stress the sector and impact credit availability.

However, US economic indicators eased fears of a hard landing. Labor market and consumer sentiment figures were better than expected. Despite the positive numbers, market bets on a May Fed rate cut fell modestly.

According to the CME FedWatch Tool, the chances of a May Fed rate cut eased from 47.4% to 43.4%.

On Wednesday, the Dow gained by 0.53%, with the Nasdaq Composite Index and S&P 500 rising by 0.46% and 0.41%, respectively. 10-year US Treasury yield ended the Wednesday session up 0.30% to 4.408%.

The Wednesday Market Movers

Symrise AG rallied 2.76% as investors responded to a US Morgan Stanley analyst favoring the news. Reports of Symrise acquiring more shares in Swedencare also contributed to the gains.

However, the auto sector had a mixed session. BMW and Mercedes Benz Group ended the day up 0.74% and 0.21%. Porsche and Volkswagen declined by 0.74% and 0.06%.

Bank stocks ended the session in negative territory as investors digested the ECB Financial Stability Review. Deutsche Bank and Commerzbank ended the day with losses of 0.66% and 1.34%, respectively.

Euro Area Private Sector PMIs in Focus

On Thursday, the euro area economy will be in the spotlight. Preliminary private sector PMIs for France, Germany, and the Eurozone will garner investor interest. An unexpected fall in private sector PMIs could impact the appetite for riskier assets. Investors are looking for a pickup in activity to ease fears of a euro area recession.

Economists forecast the Eurozone Manufacturing PMI to increase from 43.1 to 43.4 in November. Significantly, economists expect the services PMI to rise from 47.8 to 48.1. Investors must look beyond the headline figures. New orders and input and output price trends also need consideration. A pickup in inflationary pressures could force the ECB to delay rate cut talks. A more hawkish ECB rate path would impact the DAX.

There will be no US economic indicators for investors to consider on Thursday. The US markets are closed for the Thanksgiving holidays.

The futures markets point to a negative start to the Thursday session. The DAX was down 18 points.

Short-Term Forecast

Near-term trends will likely hinge on the private sector PMI numbers. Better-than-expected PMIs but softer input and output price pressures would support the appetite for riskier assets. However, US labor market conditions remain a headwind for the DAX and the broader equity markets. Tight labor market conditions could keep a hawkish Fed rate path in play.

DAX Technical Indicators

Daily Chart

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

A DAX move through the 16,004 resistance level would bring the trend line into play.

The euro area private sector PMIs will be the focal point on Thursday.

However, a fall through 15,800 would give the bears a run at the 15,694 support level.

The 14-day RSI reading of 72.51 shows the DAX in overbought territory. Selling pressure would likely intensify at 16,000.

4-Hourly Chart

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

A move through the 16,004 resistance level would bring the trend line into play.

However, a break below the 15,800 handle would support a move toward the 15,694 support level.

The 76.45 14-4 hour RSI shows the DAX in overbought territory. Selling pressure could intensify at 16,000.

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