Dax Index News: Forecast Eyes 24,500 as US-Russia Talks Drive Market Mood

DAX Extends Gains as Eurozone Recession Risks Abate

Rising optimism over the Eurozone economy dodging a recession boosted demand for DAX-listed stocks. The DAX climbed 0.79% on Thursday, August 14, following the previous session’s 0.67% gains, closing at 24,378.

The Eurozone economy expanded 0.1% quarter-on-quarter in Q2, matching first estimates, easing tariff-fueled recession fears. The economy had expanded 0.6% in the previous quarter.

However, US economic data capped the session gains, as inflation-linked indicators tempered bets on aggressive Fed rate cuts.

Defense and Aerospace Stocks Rebound Ahead of Crunch Talks

Rheinmetall AG led the gains on August 14, rallying 2.76%, with Airbus and MTU Aero rising 2.31% and 2.07%, respectively. Defense-linked stocks had been under pressure amid hopes for progress toward ending the Russia-Ukraine war. However, expectations of increased spending on defense lifted sentiment.

Bank stocks continued to trend higher, with Commerzbank and Deutsche Bank rising 1.85% and 1.65%, respectively.

At the other end of the table, insurers extended losses after disappointing earnings results. Hannover Re and Munich Re fell 0.85% and 0.61%, respectively.

US-Russia Talks in Focus: Can Trump Broker a Peace Deal?

On Friday, August 15, markets brace for heightened volatility as US-Russia talks take center stage. Positive updates, leading to a meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy, could boost demand for German-listed stocks. However, stalled talks may pressure risk assets.

Wall Street Mixed as US Producer Prices Trigger Inflation Jitters

US producer prices and labor market data weighed on expectations of a Fed rate cut. The Nasdaq Composite Index and the Dow posted losses of 0.01% and 0.02%, respectively, while the S&P 500 rose 0.03%.

US producer prices rose 3.3% year-on-year in July, up from 2.4% in June, while core producer prices soared 3.7% (June: 2.6%).

Given that economists view producer prices as a leading inflation indicator, the upswing signaled a potential increase in inflationary pressures. Rising consumer prices may delay Fed rate cuts and push borrowing costs higher. An uptick in borrowing costs could affect corporate earnings and share prices.

According to the CME FedWatch Tool, the chances of a September Fed rate cut fell from 100% on August 13 to 92.1% on August 14. Notably, the DAX briefly dipped to a low of 24,265 before recovering.

US Retail Sales, Consumer Sentiment, and the Fed in Focus

Later in the session on Friday, August 15, US economic data could further influence the Fed rate path. Economists expect retail sales to rise 0.5% month-on-month in July after June’s 0.6% increase. A sharper increase in retail sales may signal a less dovish Fed rate path, given that consumer spending can fuel demand-driven inflation. Conversely, a lower print could lift bets on multiple Fed rate cuts.

Economists expect the Michigan Consumer Sentiment Index to rise from 61.7 in July to 62 in August. Improving consumer sentiment may indicate an uptick in spending and inflation. On the other hand, a drop in sentiment could support a more dovish Fed policy stance.

Other stats include New York Empire State Manufacturing and industrial production numbers. However, the retail sales and consumer sentiment will be the key releases.

Outlook: Key Catalysts for the DAX

The DAX’s near-term outlook hinges on geopolitical headlines, US data, and central bank commentary.

• Bullish Case: Positive US-Russia talks, softer US data, and dovish central bank guidance. These factors could drive the DAX toward the 24,500 resistance level.
• Bearish Case: Stalled talks, strong US data, or hawkish central bank rhetoric. These scenarios may push the DAX toward the crucial 24,000 support level.

At the time of writing on August 15, the DAX futures jumped 105 points, while the Nasdaq 100 gained 1 point.

DAX Technicals

After the recent gains, the DAX trades well above its 50-day and 200-day EMAs, indicating bullish momentum.

• Upside Target: A breakout above the 24,500 level could pave the way to the all-time high of 24,639. A sustained move through 24,639 may enable the bulls to target 25,000.
• Downside risk: A drop below 24,000 could expose the 50-day EMA, with 23,500 the next key support level.

DAX Outlook Summary: Geopolitics, US Data, and Central Bank Rhetoric

Traders should closely monitor updates from Alaska as US-Russia talks get underway. US data and central bank rhetoric will also influence sentiment. However, geopolitical developments and central bank guidance are likely to have greater weight on the Index.

Explore our exclusive forecasts to assess whether the DAX can reach new highs. Refer to our latest forecasts and macro insights here for further analysis, and consult our economic calendar.