DAX Index: Eurozone GDP and US CPI Report in Spotlight

Highlights

• The DAX gained by 0.73% on Monday, ending the session at 15,345.
• Hopes of improving US-China ties drove demand for DAX-listed stocks on Monday.
• On Tuesday, Eurozone GDP, US inflation, and central bank speeches will be the focal points.

Monday DAX Overview

The DAX gained 0.73% on Monday. After a 0.77% loss on Friday, the DAX ended the day at 15,345.

US-China News Shifts the Focus Away from Inflation

On Monday, hopes of improving US-China relations drove demand for riskier assets. US President Joe Biden and China Premier Xi Jinping will meet on Wednesday at the Asian-Pacific Economic Cooperation Summit.

North Korea, Russia, Ukraine, and the Middle East conflict and military cooperation are likely topics. However, fair trade and economic relations are also on the table for discussion. Progress toward fair trade and better economic relations could fuel demand for riskier assets.

There were no economic indicators for Germany or the Eurozone to influence buyer demand.

US CPI Report Angst Leaves the US Markets Flat-Footed

On Monday, the Dow gained 0.16%, while the Nasdaq Composite Index and S&P 500 declined by 0.22% and 0.08%, respectively.

Investor caution ahead of US inflation numbers left the US equity markets flat-footed. There were no US economic indicators or Fed speeches to impact riskier assets.

The Monday Market Movers

Siemens Energy AG led the session, rallying 6.03%. Investors responded to reports of a $16 billion guarantee deal.

The German auto sector also made solid gains in the hopes of a shift in China–West relations. Volkswagen gained 1.35%, with BMW rising by 1.01%. Porsche and Mercedes Benz Group ended the session up 0.80% and 0.19%, respectively.

Commerzbank continued to rise following earnings results from Wednesday, gaining 2.95%. Deutsche Bank ended the session up 1.05%.

Eurozone Q3 GDP and the ECB in Focus

On Tuesday, Q3 GDP numbers for the Eurozone will garner investor interest. Economists forecast the economy to contract 0.1% in the third quarter after expanding 0.2% in the previous quarter.

A more marked contraction than forecast could test the appetite for riskier assets. However, a contraction may also ease the pressure on the ECB to maintain a hawkish interest rate path. Other stats include ZEW Economic Sentiment figures for Germany and the Eurozone. An improving outlook may cushion any downside.

With GDP numbers in focus, investors must monitor ECB commentary. ECB Chief Economist Philip Lane is on the calendar to speak. References to inflation and the outlook for interest rates need consideration. Concerns about elevated inflation and the talk of further rate hikes could weigh on the DAX.

US CPI Report and Fed Speakers in the Spotlight

Later in the Tuesday session, the heavily anticipated US CPI Report will garner investor interest. Hotter-than-expected inflation figures could refuel bets on a December Fed rate hike. Significantly, a more hawkish Fed rate path could reignite fears of a hard landing.

On November 9, Fed Chair Powell warned about more rate hikes. Sticky inflation could force the Fed into a December move. Economists forecast the US annual inflation rate to soften from 3.7% to 3.3%. However, economists expect the core inflation rate to remain at 4.1%.

With inflation in the spotlight, FOMC member speeches also need tracking. FOMC members Loretta Mester, Michael Barr, and Austan Goldsbee are on the calendar to speak. Reaction to the CPI Report and forward guidance on interest rates warrant consideration.

The futures markets point to a slow start to the Tuesday session. The DAX and the Nasdaq mini were up 5 and 23 points, respectively.

Short-Term Forecast

The US CPI Report and the Fed remain the focal points for the equity markets. Sticky inflation and hawkish Fed comments could impact buyer demand for DAX-listed stocks. However, hopes of positive talks between President Biden and Premier Jinping could cushion the downside.

DAX Technical Indicators

Daily Chart

The DAX sat 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 200-day EMA would support a move to the 15,477 resistance level.

Better-than-expected Eurozone GDP numbers and softer US inflation could support a positive session. However, ECB and Fed speakers must tone down hawkish rhetoric to support buyer demand.

However, hotter-than-expected US inflation numbers and hawkish Fed comments could sink the DAX. A fall through the 50-day EMA and 15,247 support level would bring the 14,957 support level into view.

The 14-day RSI reading of 57.87 suggests a DAX move to the 15,477 resistance level before entering overbought territory.

4-Hourly Chart

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

A DAX move through the 200-day EMA would give the bulls a run at the 15,477 resistance level.

However, a break below the 15,247 support level would bring the 50-day EMA into play.

The 65.46 14-4 hour RSI signals a DAX break above the 200-day EMA before entering overbought territory.

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