DAX Index Today: After 18,000 the Focus Turns to the ECB and US Producer Prices

Overview of the DAX Performance on Wednesday

The DAX slipped by 0.02% on Wednesday. After a 1.23% rally on Tuesday, the DAX ended the session at 17,961. Significantly, the DAX climbed to a new all-time high of 18,001.

Eurozone Industrial Production Flashes Recession Signal

On Wednesday, industrial production numbers for the Eurozone fueled bets on an H1 2024 ECB rate cut. Industrial production slid by 3.2% in January after rising by 1.6% in December. Economists forecast industrial production to decline by 1.5%.

The January numbers highlighted a deteriorating euro area macroeconomic environment, driving bets on an H1 2024 ECB rate cut.

Pre-US Producer Price and Retail Sales Report Jitters

On Wednesday, US investors turned cautious as the focus shifted to US economic data, out on Thursday. After the hotter-than-expected US CPI Report, better-than-expected producer prices and retail sales could cut bets on an H1 2024 Fed rate cut.

There were no US economic indicators for investors to consider on Wednesday. The lack of stats left US Treasuries and the US equity markets to influence the final hours of the Wednesday session.

10-year US Treasury yields climbed higher, pressuring buyer demand for riskier assets. Yields rose by 0.94%, ending the Wednesday session at 4.192%. On Wednesday, the Dow gained 0.10%. The Nasdaq Composite and S&P 500 saw losses of 0.54% and 0.19%, respectively.

The Wednesday Market Movers

Auto stocks were among the worst performers on Wednesday, reversing gains from Tuesday. Porsche and Volkswagen slid by 5.89% and 2.62%, respectively. BMW and Mercedes Benz Group saw losses of 1.17% and 1.13%, respectively.

However, retail stocks had a positive mid-week session. Zalando SE surged 19.16% on the earnings outlook for 2024. Adidas rallied 3.84% despite reporting an operating loss in Q4 and warning about 2024 sales trends for North America.

The ECB Remains in Focus

On Thursday, ECB commentary needs investor consideration. Support for a June ECB rate cut could boost demand for DAX-listed stocks. However, investors may take more interest in the economic outlook amidst rising bets on an H1 2024 rate cut.

ECB Executive Board members Frank Elderson, Isabel Schnabel, and Luis de Guindos are on the calendar to speak.

Views on inflation, the economic outlook, and the timeline for an ECB rate cut could move the dial.

However, the earnings calendar could also influence DAX price trends. Rheinmetall AG, RTL Group, and RWE AG are among the big names to release earnings.

US Economic Calendar: Producer Prices and Retail Sales

On Thursday, the US economic calendar will influence market risk sentiment early in the US session. Producer prices and retail sales figures for February could influence bets on an H1 2024 Fed rate cut.

Upward trends in producer prices signal an improving demand environment. Producers raise prices on higher demand, passing costs onto consumers. An expectation of higher consumer prices could adjust the timeline for a Fed rate cut to H2 2024.

Economists forecast producer prices to increase by 1.1% in February after rising by 0.9% in January.

US retail sales also need consideration. Consumer spending fuels demand-driven inflationary pressures. Economists expected US retail sales to increase by 0.8% in February after falling by 0.8% in January.

Reducing bets on an H1 2024 Fed rate cut may impact the appetite for DAX-listed stocks.

Short-term Forecast

Near-term trends for the DAX will likely hinge on the ECB and the Fed. Softer US producer prices and a less marked increase in retail sales would signal a June Fed rate cut. However, investors must track economic indicators for signs of a marked deterioration in the global macroeconomic environment,

On Wednesday, the DAX futures were down 11 points, while the Nasdaq mini was up by 56 points.

DAX Technical Indicators

Daily Chart

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

A DAX break above the Wednesday all-time high of 18,001 would give the bulls a run at the 18,200 handle.

On Thursday, earnings, ECB commentary, and the US economic calendar need consideration.

However, a drop below the 17,900 handle could signal a fall through the 17,800 handle.

The 14-day RSI at 76.86 shows the DAX in overbought territory. Selling pressure could intensify at the Wednesday high of 18,001.

4-Hourly Chart

The DAX hovered above the 50-day and 200-day EMAs, reaffirming the bullish price trends.

A DAX return to the all-time high of 18,001 would give the bulls a look at the 18,200 handle.

However, a drop below the 17,900 handle would bring the 50-day EMA into view.

The 14-period 4-hour RSI at 71.26 shows the DAX in overbought territory. Selling pressure may intensify at the all-time high of 18,001.