DAX Index: Futures Flash Green with 17,100 in Sight

Highlights

• The DAX fell by 0.26% on Thursday, ending the session at 16,859.
• Eurozone inflation numbers for January, US labor market data, and corporate earnings influenced Thursday.
• On Friday, corporate earnings and the US Jobs Report warrant investor attention.

Overview of the DAX Performance on Thursday

The DAX fell by 0.26% on Thursday. Following a 0.40% loss on Wednesday, the DAX ended the Thursday session at 16,859. Significantly, the DAX extended its losing streak to three sessions.

German Manufacturing and Eurozone Inflation

German Manufacturing PMI numbers and Eurozone inflation figures drew investor interest on Thursday.

The German Manufacturing PMI increased from 43.3 to 45.5 in January, up from a preliminary 45.4. Output and new orders declined at a slower pace in January. However, firms reported shipping delays because of the attacks in the Red Sea. Notably, factory gate prices continued to fall. However, prices fell at the second-slowest pace since prices started declining in June 2023.

The Eurozone annual inflation rate softened from 2.9% to 2.8%. However, the core inflation rate eased from 3.4% to 3.3%, signaling sticky inflation.

US Economic Calendar: Labor Market Data Failed to Offer Support

On Thursday, US labor market data failed to drive buyer demand for DAX-listed stocks. Despite weaker-than-expected numbers, bets on a March Fed rate cut remained subdued.

Initial jobless claims increased from 215k to 224k in the week ending January 27. Unit labor costs increased by 0.5% quarter-on-quarter in Q4 versus a 1.1% decline in Q3. Nonfarm productivity rose by 3.2% quarter-on-quarter versus 4.9% in Q3.

However, better-than-expected US manufacturing sector data provided the DAX with late support. The S&P Global Manufacturing PMI increased from 47.9 to 50.7 in January, up from a preliminary 47.2. In January, the ISM Manufacturing PMI increased from 47.1 to 49.1.

The US equity markets responded to the softer labor market numbers. On Thursday, the Nasdaq Composite Index and the S&P 500 gained 1.30% and 1.25%, respectively. The Dow ended the day up 0.97%.

The Thursday Market Movers

Siemens Healthineers rallied 4.44% on Thursday on better-than-expected earnings. Deutsche Bank was also a front-runner, gaining 2.96% as investors reacted to Q4 earnings results.

However, Adidas and Zalando SE extended losses, falling by 2.08% and 1.85%, respectively.

Investor sentiment toward the recent US court ruling continued to impact Bayer, which fell by 2.16%.

However, auto stocks had a mixed session. Volkswagen and Porsche saw losses of 1.39% and 0.88%, respectively. However, BMW and Mercedes Benz Group saw gains of 0.26% and 0.37%, respectively.

Porsche ended the session in negative territory despite Ferrari logging record profits.

The European Corporate Earnings Calendar in Focus

On Friday, investors must consider corporate earnings from Europe. UniCredit is on the calendar to release earnings.

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

However, investors must monitor ECB commentary. Reaction to the recent inflation figures could move the dial.

US Calendar: US Labor Market in Focus

On Friday, the US labor market will be under the spotlight again. Weaker-than-expected wage growth and a higher-than-expected US unemployment rate could refuel bets on a March Fed rate cut. Rising bets on a March Fed rate cut could drive demand for DAX-listed stocks.

Economists forecast average hourly earnings to increase by 4.1% year-over-year in January and the unemployment rate to rise to 3.8%. In December, average hourly earnings rose by 4.1% year-over-year, while the US unemployment held steady at 3.7%.

Other stats include the finalized Michigan Consumer Sentiment numbers and factory orders. However, these will likely play second fiddle to the US Jobs Report.

Beyond the economic calendar, investors must consider the US earnings calendar. Apple Inc. (AAPL), Amazon.com Inc. (AMZN), and Meta Platforms Inc. (META) released earnings after the European markets closed on Thursday. Upbeat earnings could fuel an early breakout.

On Friday, Chevron Corp. (CVX) and Exxon Mobil Corp. (XOM) are among the big names to release earnings.

Short-term Forecast

Near-term trends for the DAX will likely hinge on corporate earnings, the US labor market data, and central bank commentary. Weaker-than-expected US labor market data and upbeat corporate earnings could support a DAX move to 17,100.

In the futures markets, the DAX and the Nasdaq mini were up 154 and 175 points, respectively.

DAX Technical Indicators

Daily Chart

The DAX sat well above the 50-day and 200-day EMAs. On Friday, the EMAs continue to affirm bullish price signals.

A DAX return to 17,000 would support a break above the December all-time high of 17,003 to target 17,100.

On Friday, corporate earnings, central bank commentary, and the US Jobs Report warrant investor attention.

However, a drop below the 16,850 handle would bring the 16,750 handle into play.

The 14-day RSI at 58.02 indicates a DAX move to the ATH of 17,003 before entering overbought territory.

4-Hourly Chart

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

A DAX break above the Tuesday high of 17,000 would support a move toward 17,100.

However, a break below the 50-day EMA would support a fall toward the 16,470 support level.

The 14-period 4-hour RSI at 51.56 suggests a DAX break above the ATH before entering overbought territory.