The DAX gained 0.25% on Thursday, ending the session at 16,964.
On Friday, German inflation numbers will warrant investor attention.
Central bank commentary and corporate earnings also need consideration.
Overview of the DAX Performance on Thursday
The DAX gained 0.25% on Thursday. Partially reversing a 0.65% loss from Wednesday, the DAX ended the session at 16,964.
China Deflation, Corporate Earnings, and the ECB
On Thursday, concerns about the Chinese economy impacted the buyer demand for DAX-listed stocks. Consumer prices fell at a more marked pace year-over-year in January, with producer prices also reflecting a weak demand environment.
Deflationary pressures picked up despite stimulus measures to shore up the economy. Meaningful fiscal stimulus measures could change the narrative.
There were no economic indicators from Germany for investors to consider. ECB Chief Economist Philip Lane failed to impact market risk sentiment. Lane said the ECB needed more confidence that inflation is returning to target.
Corporate earnings warranted investor attention. Siemens AG, Credit Agricole, and Société Generale were among the big names to release earnings in the region.
The US Labor Market, The Fed, and Corporate Earnings
Later in the Thursday session, US labor market figures garnered investor interest. US initial jobless claims decreased from 227k to 218k in the week ending February 3. The US labor market data supported the reducing bets on a Fed March rate cut.
FOMC voting member Thomas Barkin reiterated the need for patience vis-à-vis cutting interest rates.
Away from the economic calendar, corporate earnings also influenced market risk sentiment. Warner Music Group Corp. (WMG), Ralph Lauren Corp. (RL), and Thomson Reuters Co. (TRI) were among the big names to release earnings.
On Thursday, the Dow gained 0.13%. The S&P 500 and the Nasdaq Composite rose by 0.24% and 0.06%, respectively.
The Thursday Market Movers
Infineon Technologies led the way, rallying 3.98%.
Auto stocks continued to respond to Ford Motor Co. (F) earnings and the positive outlook for 2024.
BMW and Mercedes-Benz Group saw gains of 2.84% and 1.66%, respectively. Porsche and Volkswagen ended the day up 0.50% and 0.87%, respectively.
Siemens AG gained 0.96% on better-than-expected earnings.
However, the banks had a mixed Thursday session. Deutsche Bank rose by 0.10%, while Commerzbank declined by 0.96%. Credit Agricole reported a fall in net profit, pressuring stocks. Societe Generale reported a drop in net banking income, contributing to the mood amidst concerns over US regional banks.
The Friday Session: German Inflation, the ECB, and Corporate Earnings
On Friday, finalized German inflation figures will garner investor interest. According to preliminary numbers, the annual inflation rate softened from 3.7% to 2.9% in January. Upward revisions to the preliminary figures could test buyer demand for DAX-listed stocks.
With inflation in focus, ECB commentary also needs consideration. ECB Executive Board member Piero Cipollone is on the calendar to speak. Reactions to the inflation numbers and forward guidance on interest rates could move the dial.
There are no US economic indicators for investors to consider on Friday. Nonetheless, investors must track Fed commentary later in the session. Reducing bets on an H1 2024 Fed rate cut could pressure the DAX.
However, corporate earnings from Europe and the US could influence investor sentiment. Hermes International and. PepsiCo, Inc. (PEP) are among the big names to release earnings.
Corporate earnings, inflation, and central bank commentary will influence near-term trends for the DAX. Investors will likely show more sensitivity to corporate earnings results. However, updates on US regional banks and stimulus chatter from Beijing also need consideration.
On Thursday, the DAX futures and the Nasdaq mini were down 20 and 2 points, respectively.
DAX Technical Indicators
The DAX remained well above the 50-day and 200-day EMAs, affirming bullish price signals.
If the DAX breaks above the Tuesday all-time high of 17,050, it could support a move toward 17,100.
On Friday, German inflation, corporate earnings, and central bank commentary need consideration.
However, a drop below the 16,850 handle would support a fall toward the 16,750 handle.
The 14-day RSI at 59.61 suggests a DAX move through the ATH of 17,050 before entering overbought territory.
DAX 090224 Daily Chart
The DAX sat above the 50-day and 200-day EMAs, confirming the bullish price trends.
A DAX break above the Tuesday all-time high of 17,050 would support a move to 17,100.
However, a fall through the 50-day EMA would bring the 16,750 handle into view.
The 14-period 4-hour RSI at 54.41 indicates a DAX move to 17,100 before entering overbought territory.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.