Dax Index News: PMIs, Jobs, and Fed Signals Dominate DAX Market Analysis

DAX Slips as Focus Shifts to Crucial Economic Data and the Jackson Hole Symposium

Market anxiety about Fed Chair Powell’s looming speech from Jackson Hole lingered. The DAX fell 0.02% to 24,272 in early trading on Thursday, August 21.

Uncertainty surrounding Powell’s views on tariffs, inflation, and the labor market tested demand for risk assets. Overnight, the FOMC Meeting Minutes highlighted division among Committee members. Concerns varied from upside risks to inflation to downside risks to employment.

Defense Stocks Rebound on Demand Outlook

Defense stocks led the gains this morning. Expectations of a pickup in spending on military equipment to replenish supply lifted sentiment. Rheinmetall rallied 1.49%, while MTU Aero gained 0.68%.

However, auto shares were mixed ahead of crucial PMI data and Fed policy signals. Volkswagen and Porsche gained 0.15% and 0.19%, respectively, while Mercedes-Benz Group and BMW edged lower.

Private Sector PMIs to Spotlight the German Economy

This morning, flash Manufacturing and Services PMI numbers for August will provide insights into Germany’s economy. Economists expect the Manufacturing PMI to fall to 48.8 (July: 49.1) and the Services PMI to slip to 50.3 (July: 50.6).

Weaker demand, rising prices, and job cuts could fuel concerns about the economy, weighing on the DAX. On the other hand, higher-than-expected PMI numbers may boost sentiment.

While the private sector PMIs will influence demand for DAX-listed stocks, Russia-Ukraine peace talks will remain a pivotal driver of sentiment.

Wall Street Mixed Ahead of Key Data and Fed Chair Powell’s Speech

US markets posted mixed performances on Wednesday, August 20. The Dow edged 0.04% higher, while the Nasdaq Composite Index and the S&P 500 fell 0.67% and 0.24%, respectively.

AI-linked stocks came under selling pressure as investors reacted to OpenAI CEO Sam Altman’s recent comments about AI stocks being in a bubble. Ongoing uncertainty about the Fed’s forward guidance added to the cautious mood.

Markets Brace for Key Data and Speeches from the Fed Gathering

Later in the Thursday session, US labor market data and private sector PMIs will influence risk appetite. Economists expect initial jobless claims to rise from 224k (week ending August 9) to 225k (week ending August 16).

A resilient labor market may allow the Fed to delay cutting rates and continue monitoring the effects of tariffs on inflation. A less dovish Fed rate path may weigh on risk assets such as the DAX. Elevated borrowing costs could affect corporate earnings and share prices.

On the other hand, a sharper rise in claims may fuel speculation about multiple Fed rate cuts, potentially lifting sentiment.

Economists forecast the S&P Global Services PMI to fall from 55.7 in July to 54.2 in August. A modest drop would signal a resilient US economy, given that the services sector accounts for roughly 80% of the US GDP. Conversely, a larger-than-expected drop would indicate a loss of economic momentum, supporting a more dovish Fed rate path.

Beyond the data, Fed speeches will require consideration. The big question is whether the Fed will focus on recent inflation data or the US Jobs Report. Will Powell deliver a surprise that rattles global markets?

Unemployment rose to 4.2% in July (June: 4.1%), with nonfarm payrolls rising just 73k, boosting bets on a September Fed rate cut. However, producer and import price trends have fueled uncertainty about the Fed’s policy stance. Producer prices jumped 0.9% month-on-month in July after stalling in June, while import prices rose 0.4% (June: -0.1%).

Economists Challenge Fed Pivot Bets

The Kobeissi Letter remarked on the FOMC Meeting Minutes, stating:

“The Fed can only justify rate cuts with one data point: The labor market. But, the Fed just said they see inflation risks outweighing employment risks in the Fed Minutes. As we saw in September 2024, the Fed cut by 50 basis points and immediately blamed the labor market. If the Fed is using inflation as a gauge for rate cuts, then rate cuts are nowhere near.”

Near-Term Outlook

The DAX’s near-term trajectory hinges on the private sector PMIs, US labor market data, central bank policy signals, and Russia-Ukraine peace talks.

• Bearish Scenario: Weak economic data, hawkish central bank rhetoric, or stalled peace talks. Under this scenario, the DAX could drop to the 24,000 level.
• Bullish Scenario: Upbeat economic data, progress toward a Russia-Ukraine peace deal, or dovish policy cues. These factors could lift sentiment, driving the DAX toward its all-time high of 24,639.

DAX Technical Indicators

Daily Chart

Despite dropping below 24,500, the DAX trades above its 50-day and 200-day Exponential Moving Averages (EMA). The EMAs signal a bullish bias.

A breakout above the 24,500 level could allow the bulls to target the all-time high of 24,639. A sustained move through 24,639 may pave the way toward 25,000.

On the downside, a break below 24,000 and the 50-day EMA may bring the crucial 23,500 support level into play.

Final Thoughts

Overall, the DAX’s near-term outlook hinges on several crucial events. Russia-Ukraine peace talks, key economic data, and central bank policy cues will likely drive the index’s next moves.

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