Dax Index News: Today’s Outlook Balances Peace Optimism and Rate Risks

DAX Steadies as Hopes for a Russia-Ukraine Peace Deal Boost Sentiment

EU leaders and Ukrainian President Volodymyr Zelenskyy met in Washington, boosting hopes for a Ukraine-Russia peace treaty. The DAX rose 0.17% to 24,357 in early trading on Tuesday, August 19. A positive session would snap a two-day losing streak.

On August 18, US President Trump shared updates from Monday’s talks, stating:

“During the meeting, we discussed security guarantees for Ukraine, which guarantees would be provided by the various European Countries, with a coordination with the United States of America. Everyone is very happy about the possibility of PEACE for Russia/Ukraine. At the conclusion of the meetings, I called President Putin and began the arrangements for a meeting, at a location to be determined, between President Putin and President Zelenskyy.”

However, investor caution ahead of the Jackson Hole Symposium capped the morning gains.

Hopes for a Ukraine-Russia Peace Deal Drive Retail-Linked Stocks

Auto stocks rose amid progress toward a Ukraine-Russia peace deal. Porsche led the gains, rising 0.57%.

Online retailer Zalando climbed 0.69%, with Adidas up 0.14%.

However, defense stocks struggled amid expectations of weaker demand for military equipment. Rheinmetall slid 1.99%.

Wall Street Mixed Ahead of Corporate Earnings, Economic Data, and Fed Chair Powell’s Speech

US markets posted mixed performances on Monday, August 18, as investors looked ahead to upcoming economic data, earnings, and Fed Chair Powell’s speech. The Nasdaq Composite Index rose 0.03%, while the Dow and the S&P 500 slipped 0.08% and 0.01%, respectively.

Last week, US producer prices and import prices fueled uncertainty about the Fed’s policy stance, affecting demand for risk assets. Rising prices could stem from US tariffs, potentially delaying Fed rate cuts.

On Friday, Fed Chair Powell’s speech at the Jackson Hole Symposium is likely to influence bets on multiple Fed rate cuts and risk appetite. Concerns about rising prices and the need to delay policy easing may weigh on German-listed stocks. On the other hand, upbeat earnings and support for rate cuts could drive the DAX toward its record high of 24,639.

This week, retailers, including Walmart (WMT), will provide further clues on whether US tariffs are impacting prices and demand.

Markets Brace for Fed Speakers Ahead of the Jackson Hole Symposium

Later in the Tuesday session, FOMC members’ speeches will draw interest ahead of this week’s gathering in Jackson Hole. Reactions to inflation-linked data could influence risk appetite.

Why do last week’s inflation-linked data matter for traders? Rising prices could delay Fed rate cuts. Higher borrowing costs may weigh on corporate earnings and impact share prices.

The Wall Street Journal Chief Economics Correspondent Nick Timiraos commented:

“Economists who translate the CPI and PPI into the PCE expect monthly core inflation was 0.28% in July (3.4% annualized), which would raise the year-over-year measure to 2.9%. Headline PCE is expected to be milder at 0.21%, holding the year-over-year measures at 2.6%.”

Sentiment toward the Fed rate path remains key. However, Russia-Ukraine peace talks will also be crucial. If peace talks stall, markets may retreat over fears of an escalation in the Ukraine war. Consumer, defense, and energy, through higher oil prices, are among key sectors exposed to updates from the Russia-Ukraine peace talks. Notably, a spike in oil prices could also impact Germany’s industrial sector.

Near-Term Outlook

The DAX’s near-term outlook hinges on earnings, economic data, central bank policy guidance, and Ukraine war news.

• Bearish Scenario: Strong economic data, weak earnings, hawkish central bank cues, or stalled peace talks. Under this scenario, the DAX could drop to the 24,000 mark.
• Bullish Scenario: Softer data, a Russia-Ukraine peace deal, upbeat earnings, or dovish policy rhetoric. These factors could send the DAX toward its record high of 24,639.

DAX Technical Indicators

Daily Chart

Despite the recent pullback from 24,500, the DAX remains above the 50-day and the 200-day Exponential Moving Averages (EMA). The EMAs signal a bullish bias.

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 bring the 25,000 level into sight.

On the downside, a drop below the 24,000 level and the 50-day EMA may expose the crucial 23,500 support level.

Final Thoughts

Overall, the DAX’s near-term outlook hinges on several key factors. Russia-Ukraine peace talks and central bank policy cues will likely have greater weight on the DAX.

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