Dax Index News: Outlook Hinges on US Data, ECB Path, and Ukraine War Headlines

DAX Slips as US-Russia Talks Loom

Looming US-Russia talks tested market sentiment amid speculation over a 50-basis-point September Fed rate cut. The DAX rose 0.12% to 24,215 in early trading on Thursday, August 14, building on the previous session’s 0.67% gain.

Softer German inflation and wholesale prices supported a more dovish ECB policy stance, bolstering demand for DAX-listed stocks. Cemented bets on a September Fed rate cut also provided a bullish backdrop.

However, caution ahead of planned US-Russia talks on ending the Ukraine war overshadowed policy easing expectations early in the Thursday session. President Trump will meet Russian President Putin on Friday, August 15.

Trump warned of severe consequences if Putin blocks a peace deal. Key issues include Russia’s demand for Ukraine to withdraw plans to join NATO and to give up regions it claims belong to Russia.

Ukrainian President Volodymyr Zelenskyy commented:

“At present, there is no sign that the Russians are preparing to end the war. Our coordinated efforts and joint actions – of Ukraine, the United States, Europe, and all countries that seek peace – can definitely compel Russia to make peace.”

Bank Stocks Counter Auto Stock Losses

Bank stocks trended higher on August 14, with Commerzbank and Deutsche Bank rising 0.84% and 0.27%, respectively.  Insurance stocks also found much-needed support after the pullback from recent earnings results. Hannover Re and Munich Re climbed 0.54% and 0.25%, respectively.

Meanwhile, auto shares struggled in early trading. Volkswagen fell 0.3%, with BMW, Mercedes-Benz Group and Porsche also posting early losses.

Eurozone Economy Under the Spotlight

Early in the European session, Eurozone employment and industrial production figures will draw interest. Economists expect employment to rise 0.1% quarter-on-quarter in Q2 after a 0.2% increase in Q1.

Weaker-than-expected numbers could signal a pullback in consumer spending, dampening inflation. A softer inflation outlook would support a more dovish ECB rate path, lifting demand for risk assets. On the other hand, a higher reading may temper bets on an ECB rate cut.

Economists forecast industrial production to fall 1% month-on-month in June after rising 1.7% in May. A sharper fall in production would reflect the impact of tariffs on demand, pressuring industrial-linked stocks. Conversely, an unexpected rise in production may send the DAX higher.

Beyond the data, trade developments, Russia-Ukraine war-related news, and corporate earnings will influence DAX trends ahead of the US opening bell.

Wall Street Extends Gains as Fed Rate Cut Bets Soar

US markets posted gains on Wednesday, August 13, as investors locked in bets on a September Fed rate cut. The Dow climbed 1.04%, while the Nasdaq Composite Index and the S&P 500 advanced 0.14% and 0.32%, respectively.

US Treasury Secretary Scott Bessent fueled expectations of multiple Fed rate cuts, stating:

“I think we could go into a series of rate cuts here, starting with a 50-basis point rate cut in September. If you look at any model it suggests that we should probably be 150, 175 basis points lower.”

According to the CME FedWatch Tool, the probability of a September Fed rate cut rose from 93.9% on August 12 to 100% on August 13. Notably, there was a 6.2% chance of a 50-basis-point rate cut, up from 0% the previous day.

Markets Brace for Crucial US Producer Prices and Labor Market Data

Later in the Thursday session, US producer prices and jobless claims data will influence risk sentiment.

Economists forecast producer prices to rise 2.5% year-on-year in July, up from 2.3% in June. A higher reading may signal a less dovish Fed policy stance. Producers adjust prices based on demand. Rising demand could lead to price hikes, passing higher prices on to consumers. A higher inflation outlook may weigh on risk assets such as the DAX.

Conversely, a softer reading could bolster expectations of aggressive Fed rate cuts, lifting sentiment.

Economists forecast initial jobless claims to rise from 226k (week ending August 2) to 228k (week ending August 9). A modest increase could support further policy easing. However, a spike above 250k may revive stagflation fears, potentially weighing on sentiment.

Beyond the data, investors should track FOMC members’ reactions to the latest US data.

Near-Term Outlook

The DAX’s near-term outlook hinges on key US data, central bank policy cues, and Ukraine war headlines.

• Bearish Scenario: Hotter US inflation, a spike in jobless claims, or hawkish central bank rhetoric could challenge the DAX’s move toward 25,000. The DAX may drop below 24,000, bringing the 50-day Exponential Moving Average (EMA) into play.
• Bullish Scenario: Cooling US inflation, easing geopolitical risks, upbeat jobless claims, or dovish policy signals. These factors could lift buying momentum, driving the DAX toward its record high of 24,639.

DAX Technical Indicators

Daily Chart

Despite a cautious start to the session, the DAX remains above the 50-day and the 200-day Exponential Moving Averages (EMA). The EMAs indicate a bullish bias.

A breakout above the August 13 high of 24,247 could support a move toward the 24,500 level. A sustained move through 24,500 may bring the record high of 24,639 into play.

On the downside, a drop below the 24,000 level may allow the bears to target the 50-day EMA.

Final Thoughts

Overall, the DAX’s near-term trend hinges on several key factors. Trade headlines, key economic data, US-Russian talks, and central bank policy chatter will likely dictate the index’s next moves.

Looking ahead, traders should monitor both technical and fundamental drivers and consult our economic calendar.