DAX Index: German and US Consumer Confidence in the Spotlight

Highlights

• The DAX declined by 0.39% on Monday, ending the session at 15,966.
• On Tuesday, German GfK Consumer Confidence numbers and ECB commentary are in focus.
• However, US consumer confidence and Fed speakers also need consideration.

Monday DAX Overview

The DAX declined by 0.39% on Monday. After a 0.22% gain on Friday, the DAX ended the session at 15,966.

ECB Commentary Tempers Rate Cut Hopes

On Monday, ECB President Christine Lagarde continued to signal a higher-for-longer rate path. The ECB President warned the battle to tame inflation continues, with wage growth remaining strong amidst an uncertain outlook.

There were no euro area economic indicators to influence market risk sentiment.

However, economic indicators from China weighed on the appetite for riskier assets. Industrial profit figures failed to impress despite rising for a third consecutive month. A slower pace of growth raised concerns about the Chinese economy and suggested more policy measures are needed to bolster the economy.

US Treasury Yields Provide Little Comfort

On Monday, 10-year US Treasury yields fell by 1.88% to 4.388%. However, the pullback failed to support a late DAX recovery. The US equity markets ended the session in negative territory, with investors cautious before the inflation numbers and Fed Chair Powell speech.

The Nasdaq Composite Index slipped by 0.07%, with the Dow and S&P 500 falling by 0.16% and 0.20%, respectively.

The Monday Market Movers

Ratings downgrades contributed to the Monday losses. BASF slid by 3.11%, with Bayer declining by 3.02%. Morgan Stanley cut BASF to underweight, while Bayer slumped on news of Berenberg cutting its price target.

Investor sentiment toward the Chinese economy and the higher-for-longer ECB rate path outlook weighed on auto stocks. Daimler Truck Holding fell by 0.84%. Volkswagen (-0.82%), Continental AG (-0.68%), BMW (-0.66%), Porsche (-0.65%), and Mercedes Benz Group (-0.34%) also ended the day in negative territory.

German GfK Consumer Confidence and the ECB in Focus

On Tuesday, consumer confidence numbers from Germany will garner investor interest. An improving consumer confidence environment could support consumer-based stocks. Economists forecast the GfK Consumer Confidence Index to increase from -28.1 to -27.0.

However, investors must also consider ECB commentary. ECB President Christine Lagarde and Executive Board member Elizabeth McCaul are on the calendar to speak. Comments relating to inflation, the economy, and interest rates will be focal points.

US Consumer Confidence and Fed Speakers in the Spotlight

Later in the Tuesday session, US consumer confidence and Fed speakers will move the dial. A fall in consumer confidence could support bets on a May Fed rate cut. However, a slump in US consumer confidence could reignite fears of a hard landing and impact riskier assets.

Economists forecast the CB Consumer Confidence Index to fall from 102.6 to 101.0 in November. Sub-100 could spook investors.

Other stats include US house price reports. However, barring a slide in US house prices, the numbers will likely play second fiddle to the consumer confidence report.

Beyond the numbers, Fed speakers also warrant consideration. FOMC voting members Michelle Bowman, Austan Goolsbee, and Christopher Waller are on the calendar to speak during the European session. References to inflation, the economic outlook, and interest rates will be focal points.

The futures markets pointed to a mixed start to the Tuesday session. The DAX was down 22 points, while the Nasdaq mini was up by 1 point.

Short-Term Forecast

Near-term trends for the DAX could hinge on US inflation figures on Wednesday and Thursday and Fed Chair Powell. Softer US inflation numbers and steady euro area inflation figures could support riskier assets. The ECB has not signaled an intent to raise rates.

DAX Technical Indicators

Daily Chart

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

A DAX break above the 16,004 resistance level would support a move to the 16,142 resistance level.

Consumer confidence and central bank speeches are focal points on Tuesday.

However, a fall below the 15,850 handle would bring the 15,694 support level into view.

The 14-day RSI reading of 70.02 shows the DAX in overbought territory. Selling pressure will likely intensify at 16,000.

4-Hourly Chart

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

A DAX move through the 16,004 resistance level would give the bulls a run at the 16,142 resistance level.

However, a fall through the 15,850 handle would support a fall toward the 15,694 support level.

The 66.94 14-4 hour RSI suggests a DAX break above the 16,004 resistance level before entering overbought territory.

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