DAX Index: Services PMIs and US Job Openings in the Spotlight

Highlights

• The DAX gained 0.04% on Monday, ending the session at 16,405.
• On Tuesday, euro area Services PMIs will garner investor interest.
• Later today, US Job Openings and the ISM Non-Manufacturing PMI will also be focal points.

Overview of Monday’s DAX Performance

The DAX gained 0.04% on Monday. Following a 1.12% rally on Friday, the DAX ended the Monday session at 16,404.

German Trade Data Disappoints

On Monday, German trade data fell short of expectations, with exports unexpectedly falling in October. A more marked fall in imports also highlighted a weak demand environment. However, recent manufacturing sector PMIs for November limited the impact on the DAX.

The German trade surplus widened from €16.7 billion to €17.8 billion. However, exports declined by 0.2%, with imports sliding by 1.2%.

US Factory Orders Stumble in October

The US manufacturing sector also painted a gloomy picture of the demand environment for manufactured goods. US factory orders tumbled 3.6% in October, supporting bets on a Q1 Fed rate hike.

However, caution countered bets on a Fed rate cut, with an upswing in 10-year US Treasury yields impacting riskier assets. 10-year US Treasury yields climbed 1.33% to 4.253%.

On Monday, the Nasdaq Composite Index fell by 0.84%, with the Dow and the S&P 500 ending the session down 0.11% and 0.54%, respectively.

The Monday Market Movers

Auto and bank stocks contributed to the positive Monday session.

Volkswagen gained 0.73%, with Mercedes Benz Group and Daimler Truck Holding rising by 0.63% and 0.60%. Porsche ended the session up 0.40%, while BMW declined by 0.03%.

Deutsche Bank and Commerzbank rose by 0.09% and 0.26%, respectively.

German and Eurozone Services PMIs in Focus

On Tuesday, finalized German and Eurozone Services PMIs warrant investor consideration. Upward revisions to prelim numbers would ease concerns about a prolonged recession. However, the sub-components will also move the dial. Services inflation remains the driving force behind euro area inflation. Upward trends in prices and employment would support a higher-for-longer ECB rate path.

According to the flash surveys, the German Services PMI increased from 48.2 to 48.7. The Eurozone Services PMI rose from 47.8 to 48.2.

US Services and JOLTs Job Openings in the Spotlight

On Tuesday, the all-important ISM Non-Manufacturing PMI and the US JOLTs Job Openings Report will garner investor interest. The market bets on a Q1 2024 Fed rate cut have fueled demand for riskier assets. Better-than-expected PMI numbers and a modest fall in Job Openings could test the appetite for DAX-listed stocks.

A pickup in service sector activity would drive employment, wage, growth, and consumption. The net effect could be to delay rate cut discussions to cool the economy and tame inflation. ISM Prices and Employment sub-components will reflect inflation and labor market conditions across the services sector.

However, investors must consider the sub-components of the JOLTS Job Openings report. An unexpected rise in JOLTs quit rates would signal confidence in the labor market, suggesting sustained wage growth, and the need for a hawkish Fed rate path.

The futures markets pointed to a mixed start to the Tuesday session. The DAX was up 12 points, while the Nasdaq mini was down 33 points.

Short-Term Forecast

Near-term trends for the DAX will hinge on Services PMIs and US labor market stats. Better-than-expected Euro area stats and disappointing numbers from the SU could support the DAX at current levels.

DAX Technical Indicators

Daily Chart

The DAX held above the 50-day and 200-day EMAs, with the EMAs sending bullish price signals.

A DAX move through the Monday high of 16,456 would support a breakout from the 16,470 resistance level to target the all-time high of 16,529.

Service sector PMIs and US JOLTs Job Openings will be the focal points on Tuesday.

However, a fall to the 16,300 handle would bring the 16,290 support level into play.

The 14-day RSI reading of 79.79 shows the DAX in overbought territory. Selling pressure may intensify at the Monday high of 16,456.

4-Hourly Chart

The DAX held above the 50-day and 200-day EMAs, with the EMAs affirming bullish price signals.

A DAX break above the 16,470 resistance level would support a move to the ATH high of 16,529.

However, a fall to the 16,300 handle would give the bears a run at the 16,290 support level.

The 81.83 14-4 hour RSI shows the DAX in overbought territory. Selling pressure may intensify at current levels.

For a look at the economic events, check out our economic calendar.