Dax Index News: Peace Hopes Lift Outlook, But Fed Policy Clouds Forecast Today

DAX Snaps Losing Streak: What’s Next?

Hopes for a breakthrough in the Ukraine conflict boosted demand for risk assets. The DAX gained 0.45% on Tuesday, August 19, reversing the previous day’s 0.18% loss to close at a three-week high of 24,423. The gains came despite lingering unease over the Fed’s policy path, showing geopolitics temporarily outweighed central-bank caution.

Ukrainian President Volodymyr Zelenskyy, EU leaders, and President Trump met in Washington on August 18. Trump stated:

“At the conclusion of the meeting, I called President Putin, and began the arrangements for a meeting, at a location to be determined, between President Putin and President Zelenskyy. After that meeting takes place, we will have a Trilat, which would be the two presidents, plus myself.”

The DAX’s gains were modest despite the optimism over a Russia-Ukraine peace deal. Concerns about Fed Chair Powell’s policy stance limited the upside as the Jackson Hole Symposium loomed.

Retail-Linked Stocks Shine on Progress toward a Russia-Ukraine Peace Deal

Hopes of a peace deal boosted demand for consumer-discretionary stocks. Euro area online retailer Zalando rallied 3.68%. Mercedes-Benz Group led the auto sector, rising 2.61%.

Meanwhile, defense and energy stocks stumbled. Rheinmetall slid 4.85% on expectations of lower spending on military equipment. The potential easing of sanctions on Russian crude and a global supply boost weighed on oil prices. Siemens Energy fell 2.42% as WTI Crude declined 0.98% to $61.74 a barrel.

German Producer Prices in Focus

On Wednesday, August 20, German producer prices will be in focus. German producer prices could influence sentiment toward the ECB rate path. Economists forecast producer prices to fall 1.3% year-on-year in July, mirroring June’s decline.

A sharper fall in producer prices could signal a softer inflation outlook, supporting a more dovish ECB policy stance. Lower borrowing costs could boost corporate earnings and share prices.

On the other hand, a slower fall in producer prices could indicate resilient demand, potentially pushing inflation higher. A higher inflation outlook would weigh on rate-sensitive stocks.

While the data will influence risk sentiment, Russia-Ukraine peace talks will be key.

Wall Street Mixed as Jackson Hole Symposium Looms

Wall Street traded mixed on Tuesday, August 19. The Dow edged 0.02% higher, while the Nasdaq Composite Index and the S&P 500 fell 1.46% and 0.59%, respectively. Rate-sensitive tech stocks bore the brunt as investors braced for Fed Chair Powell to temper hopes of near-term cuts.

Fed Speakers in Focus

Later in Wednesday’s session, FOMC members’ speeches will set the tone. Any support for a September Fed rate cut and further policy easing in Q4 could lift risk appetite and the DAX. However, calls for patience to gauge the effect of tariffs on US inflation would likely weigh on German equities.

The Fed’s Meeting Minutes, due after the European close, may offer further clues. July import prices rose 0.4% after a 0.1% drop in June, a shift economists link to new tariffs — and a potential complication for the Fed’s inflation fight.

Outlook: Key Catalysts for the DAX

The DAX’s near-term outlook hinges on US-Russia peace talks, key economic data, and central bank monetary policy cues.

• Bullish Case: Progress toward a Russia-Ukraine peace deal, softer German producer prices, and dovish central bank signals. These factors could send the DAX toward the 24,500 resistance level and potentially the all-time high of 24,639.
• Bearish Case: Stalled peace talks, stronger German producer prices, or hawkish central bank rhetoric. These scenarios may push the DAX toward the crucial 24,000 support level, exposing the 50-day EMA.

Ahead of the European opening bell on August 20, the DAX futures slid 158 points, while the Nasdaq 100 dropped 99 points. Futures market trends reflected investors’ unease about the Fed’s upcoming monetary policy guidance.

DAX Technicals

Following Tuesday’s gain, the DAX trades comfortably above its 50-day and 200-day EMAs, indicating a bullish bias.

• Upside Target: A breakout above the 24,500 level could pave the way to the all-time high of 24,639. A sustained move above 24,639 could enable the bulls to target 25,000.
• Downside Risk: A drop below 24,150 could bring the 24,000 support level and the 50-day EMA into play. If breached, 23,500 would be the next key support level.

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

Traders should closely monitor news updates on the Ukraine-Russia peace talks. Key economic data and central bank chatter will also influence sentiment. However, geopolitical developments and central bank guidance are likely to have greater weight. Traders should brace for volatility if peace talks stall.

Refer to our latest forecasts and macro insights here for further analysis, and consult our economic calendar.