Dax Index News: Forecast Eyes 24,000 as Fed Cut Bets and Earnings Lift Outlook

DAX Extends Gains as Fed Rate Cut Bets and Earnings Expectations Boost Sentiment

Despite growing US recession fears, the DAX extended its rally on Fed cut optimism and earnings hopes. The DAX gained 0.37% on Tuesday, August 5, following Monday’s 1.42% rally, closing at 23,846.

Easing fears over US tariffs affecting corporate earnings and expectations of multiple Fed rate cuts boosted demand for DAX-listed stocks.

Hopes for better US-EU trade terms also lifted sentiment after the EU announced plans to delay retaliatory trade measures against the US for six months.

Sector Snapshot: Autos and Tech Stocks Surge as Banks Struggle

Infineon Technologies led the gains on August 5, rallying 4.58%. The chipmaker signaled a pickup in the semiconductor market while also raising its full-year profit forecast.

Auto stocks climbed on surprisingly strong new car registration data. Volkswagen climbed 1.83%. Porsche (+1.49%), BMW (+1.40%), and Mercedes-Benz Group (+1.31%) also posted strong gains. German new car registrations rose 11% year-on-year in July, rebounding from June’s 13.8% slump.

Meanwhile, Deutsche Bank and Commerzbank fell 0.03% and 5.99%, respectively, amid concerns of lower interest rates impacting net interest margins. Uncertainty about Commerzbank’s quarterly earnings release on August 6 contributed to the heavy loss amid ongoing restructuring efforts.

On August 6, Zalando, Vonovia, Siemens Energy, Fresenius, and Bayer are also among the big names releasing earnings results. Earnings results and outlooks will be crucial for the DAX’s near-term trends as investors continue assessing the effect of tariffs on profitability.

German Factory Orders in Focus

While earnings results and forecasts will be key, economic data from Germany will also draw interest. Economists expect factory orders to rise 1% month-on-month in June after sliding 1.4% in May.

A higher reading could ease concerns about tariffs impacting demand, lifting risk sentiment. However, another drop in orders may dampen sentiment toward German-listed stocks.

Wall Street Falls as Recession Fears Grow

US markets came under selling pressure on August 5 as investors reacted to softer service sector activity. The Dow declined 0.14%, while the Nasdaq Composite Index and the S&P 500 fell 0.65% and 0.49%, respectively.

The US ISM Services PMI dropped to 50.1 in July, down from June’s 50.8. Economists had forecast an increase to 51.5. Accounting for around 80% of the US GDP, the drop toward the neutral 50 level impacted demand for risk assets, including the DAX.

However, expectations of a September Fed rate cut limited losses on Wall Street. According to the CME FedWatch Tool, the probability of a September Fed move stood at 87.5% on August 5, up from 63.3% one week earlier.

Fed in Focus as Economic Indicators Send Warning Signals

On Wednesday, August 6, Fed speakers will be in focus after July’s Jobs Report and the ISM Services PMI.

Support for multiple Fed interest rate cuts and optimism about a soft landing could boost demand for German-listed stocks. On the other hand, hawkish Fed rhetoric or increasing concerns about the labor market and broader economy may weigh on sentiment.

Outlook: Key Catalysts for the DAX

The DAX’s near-term outlook hinges on German economic data and central bank commentary.

• Bullish Case: Upbeat factory orders and dovish central bank cues. These factors could send the DAX toward the crucial 24,000 resistance level.
• Bearish Case: Weak factory orders or hawkish central bank signals may push the DAX below the 50-day EMA.

At the time of writing on August 6, the DAX futures advanced 61 points, while the Nasdaq 100 climbed 31 points. Hopes for Fed policy support and optimism over earnings contributed to the gains.

DAX Technicals

After Tuesday’s gains, the DAX trades above the 50-day and the 200-day EMAs, indicating a bullish bias.

• Upside Target: A breakout above the 24,000 resistance level could pave the way to 24,150. A sustained move through 24,150 may bring the 24,500 level and the July 10 record high of 24,639 into sight.
• Downside risk: A drop below the 50-day EMA could enable the bears to target the 23,350 and potentially expose the crucial 23,000 support level.

DAX Outlook Summary: Trade Developments, Earnings, and Central Bank Rhetoric

Traders should closely monitor Germany’s economic data, corporate earnings, trade headlines, and central bank guidance. Earnings and central bank guidance are likely to have great weight on the Index.

Explore our exclusive forecasts to assess whether improving trade sentiment could lift the DAX to new highs. Refer to our latest forecasts and macro insights here for further analysis, and consult our economic calendar.