DAX Index: The ECB, Corporate Earnings, and Fed Chair Powell in Focus

Highlights

• The DAX gained 0.51% on Wednesday, ending the session at 15,230.
• German corporate earnings and inflation contributed to the session gains.
• On Thursday, the ECB Economic Bulletin, ECB commentary, corporate earnings, and Fed Chair Powell will be the focal points.

Wednesday DAX Overview

The DAX rose by 0.51% on Wednesday. After rising by 0.11% on Tuesday, the DAX ended the day at 15,230.

German Inflation and Eurozone Retail Sales Ease Rate Fear

On Wednesday, German inflation and Eurozone retail sales figures eased fear of the ECB keeping rates higher for longer. The German annual inflation rate softened from 4.5% to 3.8%. Significantly, Eurozone retail sales declined by 0.3%, signaling a weakening demand environment.

An uncertain macroeconomic backdrop added to the prospect of the ECB taking a less hawkish rate path.

While the numbers were DAX-friendly, ECB Chief Economist Philip Lane remained concerned about inflation. The ECB Chief Economist discounted softer inflation figures for the Euro area, attributing the decline to a sharp fall in energy prices. Lane predicted inflation would unlikely return to 2% until 2025.

However, German corporate earnings countered central bank chatter. Adidas, Continental, Commerzbank, Deutsche Post, and Siemens Healthineers released upbeat earnings on Wednesday.

There were no US economic indicators to distract investors on Wednesday. Significantly, Fed Chair Powell avoided the subject of monetary policy in a heavily anticipated speech.

The Wednesday Market Movers

Continental AG rallied by 4.08%, with Deutsche Post gaining 2.87%. Siemens Healthineers rose by 1.27%, with Commerzbank ending the day up 0.72%. Earnings results fueled buyer appetite.

However, Adidas declined by 1.31%, with retail sales figures and recessionary jitters likely weighing. European online retailer Zalando SE slid by 3.52%. Siemens Energy AG declined by 2.34% as investors responded to the latest updates on the Siemens Ltd sale.

ECB Economic Bulletin and Corporate Earnings in Focus

On Thursday, the ECB Economic Bulletin will draw investor interest. The Economic Bulletin will give investors an ECB view on the economy, inflation, and monetary policy, including projections. A deteriorating macroeconomic environment has fueled recessionary fears, with the German and euro area economies under pressure.

ECB commentary also warrants consideration. ECB President Christine Lagarde and Chief Economist Huw Pill are on the calendar to speak on Thursday. References to the economic outlook, inflation, and interest rates need monitoring.

There are no euro area economic indicators to influence investor sentiment. However, corporate earnings will continue to provide direction. Deutsche Telekom AG, Merck, and Rheinmetall AG are among the big names to release earnings results.

Fed Chair Powell and the US Labor Market in the Spotlight

Later today, the US labor market will be in focus. Jobless claims for the week ending November 4 will garner investor interest. Following recent labor market reports, a spike in jobless claims could support bets on the Fed ending its rate hike cycle.

Economists forecast jobless claims to increase from 217k to 218k.

However, Fed speeches may have more influence on market risk sentiment. Fed Chair Powell is on the calendar to speak on Thursday. An affirmation that labor market conditions have softened sufficiently to support price stability would drive appetite for riskier assets.

The futures markets point to a negative start to the Thursday session. The DAX and the Nasdaq mini were down 19 and 16 points, respectively.

Short-Term Forecast

Near-term trends for the DAX remain hinged on the Fed interest rate path and the macroeconomic environment. A hawkish Fed Chair Powell and a gloomy ECB Economic Bulletin will likely leave the DAX under pressure.

DAX Technical Indicators

Daily Chart

The DAX sat below the 50-day and 200-day EMAs, affirming bearish price signals.

A DAX break above the 15,247 resistance level and the 50-day EMA would support a move to the 200-day EMA.

The ECB Economic Bulletin, corporate earnings, and central bank commentary will be the focal points on Thursday.

However, a drop below 15,000 would give the bears a run at the 14,957 support level.

The 14-day RSI reading of 55.04 suggests a DAX move through the 50-day EMA before entering overbought territory.

4-Hourly Chart

The DAX holds above the 50-day EMA while remaining below the 200-day EMA, sending bullish near-term but bearish longer-term price signals.

A DAX break above the 15,247 resistance level would support a move to the 200-day EMA into play.

However, a fall through the 50-day EMA would bring the 14,957 support level into play.

The 64.78 14-4 hour RSI reading suggests a DAX break above the 15,247 resistance level before entering overbought territory.

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