DAX Index Today: Corporate Earnings, the ECB, and the Fed in the Spotlight

The Overview of the DAX Performance

The DAX gained 0.02% on Wednesday. After sliding by 1.44% on Tuesday, the DAX ended the session at 17,770.

Eurozone Inflation Supports a June ECB Rate Cut

Finalized inflation numbers for the Eurozone supported investor bets on a June ECB rate cut. The annual core inflation rate softened from 3.1% to 2.9%, with the inflation rate down from 2.6% to 2.4%. Inflation numbers aligned with the preliminary figures.

Nevertheless, ECB member forward guidance on interest rates continued to fuel expectations of a June rate cut. With investors cementing a June rate cut, the focus will likely shift to the July policy decision. However, ECB members have mixed views on a July rate cut after the recent shift in sentiment toward the Fed rate path.

There were no stats from the US for investors to consider in the Wednesday session. Expectations of a less dovish rate path impacted buyer demand for riskier assets.

On Wednesday, the Nasdaq Composite Index and the S&P 500 declined by 1.15% and 0.58%, respectively. The Dow ended the session down 0.12%.

The Wednesday Market Movers

Auto stocks extended their losses from Tuesday. Continental AG was the worst performer, sliding by 5.47%. Daimler Truck Holding and Porsche saw losses of 1.12% and 1.07%, respectively. BMW and Mercedes Benz Group declined by 0.47% and 0.28%, respectively. Volkswagen bucked the trend, gaining 0.33%.

Tech stocks continued to retreat, with Infineon Technologies and SAP falling by 1.85% and 0.95%, respectively. ASML reported weaker-than-expected earnings results, impacting the tech sector.

However, Adidas surged 8.72% after better-than-expected Q1 earnings results and a better outlook for 2024. Online retailer Zalando SE benefited, rising by 1.56%.

The European Central Bank and Corporate Earnings in Focus

On Thursday, investors should monitor ECB commentary. Increasing support for a July ECB rate cut could drive buyer demand for DAX-listed stocks. ECB Executive Board member Luis de Guindos is on the calendar to speak.

Moreover, investors should consider comments from ECB President Christine Lagarde and ECB Executive Board member Piero Cipollone. Lagarde and Cipollone will attend the G20 Finance Ministers and Central Bank Governors meeting.

With earnings in focus, L’Oreal, Danone, and Sartorius AG are among the big names to release earnings results.

US Economic Calendar: Jobless Claims, the Philly Fed, and Fed Speakers

Jobless claims and the Philly Fed Manufacturing Index will draw interest on Thursday. An unexpected fall in jobless claims could reduce bets further on a 2024 Fed rate cut. Economists forecast initial jobless claims to increase from 211k to 215k in the week ending April 13.

However, a larger-than-expected fall in the Philly Fed Manufacturing Index could influence sentiment toward the US economy. Early cracks in the economy could test expectations of the US avoiding a US recession. Economists expect the Philly Fed Manufacturing Index to fall from 3.2 to 1.5 in April.

Beyond the stats, investors should track FOMC member commentary. FOMC members Michelle Bowman, John Williams, and Raphael Bostic are on the calendar to speak. Support to delay interest rate cuts until Q4 2024 could impact market risk sentiment.

However, US corporate earnings will also be in focus. Netflix Inc. (NFLX) will release earnings results.

Near-Term Outlook

Near-term trends for the DAX will hinge on forward guidance from the ECB and the Fed. Corporate earnings will impact buyer demand for DAX-listed stocks. However, investors must monitor news updates from the Middle East.

In Futures trading, the DAX and Nasdaq mini were up by 5 and 71 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX return to the 17,800 handle could give the bulls a run at 18,000. A return to 18,000 would support a move toward the 18,200 handle.

The ECB commentary, corporate earnings, and the US economic calendar warrant investor attention.

However, a fall through the 50-day EMA would give the bears a run at the 17,615 support level. A drop below the 17,615 support level would bring the 17,500 handle into play.

The 14-day RSI at 41.68 suggests a DAX drop to 17,500 before entering oversold territory.

4-Hourly Chart

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

A return to 17,800 would support a move to the 18,000 handle. A break above the 18,000 handle would bring the 50-day EMA into play.

Conversely, a fall through the 17,750 handle could signal a DAX drop to the 17,615 support level. A break below the 17,615 support level would bring the 200-day EMA into play.

The 14-period 4-hour RSI at 38.98 indicates a DAX fall to the 17,615 support level before entering oversold territory.