DAX Index Today: Earnings, the US Jobs Report, and the ISM Services PMI in Focus

The Overview of the DAX Performance

The DAX declined by 0.20% on Thursday (May 2). Following a 1.03% loss on Tuesday (April 30), the DAX ended the session at 17,897. The German markets were closed on May 1 for the Labor Day holiday.

Reaction to the FOMC Press Conference and Manufacturing PMIs

On Thursday (May 2), investors reacted to the overnight FOMC press conference. Fed Chair Powell warned about the lack of progress in bringing inflation to target.

The comments aligned with reducing investor expectations of multiple 2024 Fed rate cuts. However, the Fed Chair poured cold water on speculation about a Fed interest rate hike to curb spending and dampen demand-driven inflationary pressures.

Better-than-expected manufacturing sector PMI numbers for Germany and the Eurozone failed to drive buyer demand for DAX-listed stocks.

The German HCOB Manufacturing PMI increased from 41.9 to 42.5 in April, up from a preliminary 42.2. Moreover, the Eurozone HCOB Manufacturing PMI slipped from 46.1 to 45.7, up from a flash PMI of 45.6.

US Unit Labor Costs and Nonfarm Productivity

US labor market data warranted investor attention before the all-important US Jobs Report.

Unit labor costs surged 4.7% quarter-on-quarter in Q1 2024 after stalling in Q4 2024. Furthermore, nonfarm productivity increased by 0.3% in Q1 2024 after advancing by 3.5% in Q4 2023.

The unit labor cost figures signaled higher wages, which could fuel consumer spending and demand-driven inflation. However, weaker-than-expected productivity numbers tempered investor bets on the Fed standing pat in September.

On Thursday (May 2), the Nasdaq Composite Index rallied 1.51%. The Dow and the S&P 500 advanced by 0.85% and 0.91%, respectively. Apple Inc. (AAPL) released quarterly earnings, beating forecasts.

The Thursday Market Movers

Zalando SE led the way down, sliding by 4.66%, with Adidas falling by 1.06%. Investors reacted to warnings from Hugo Boss about lackluster demand from China and an uncertain macroeconomic environment.

Tech stocks also suffered heavy losses, with Infineon Technologies and SAP declining by 4.23% and 0.68%, respectively.

Auto stocks had a mixed Thursday session. Volkswagen and BMW saw losses of 0.69% and 0.49%, respectively. Mercedes Benz Group ended the session down 0.04%. Porsche and Daimler Truck Holdings bucked the trend, gaining 0.23% and 1.02%, respectively.

Eurozone Unemployment, the ECB, and Corporate Earnings

On Friday (May 3), unemployment figures for the Eurozone will draw investor attention. Economists forecast the unemployment rate to remain unchanged at 6.5%. An unexpected increase in the unemployment rate could fuel speculation about post-June ECB rate cuts.

Beyond the economic calendar, corporate earnings also need consideration.

Daimler Truck Holding, Credit Agricole, and Societe Generale are among the big names to release earnings results.

US Economic Calendar: The US Jobs Report and ISM Services PMI in Focus

Later in the Friday session, the US Jobs Report and ISM Services PMI could influence the Fed rate path.

Economists forecast average hourly earnings to increase 4.0% year-on-year in April after rising 4.1% in March. Moreover, economists expect nonfarm payrolls to increase by 243k in April after a 303k jump in March.

Weaker-than-expected numbers could fuel investor bets on a September Fed rate cut. A more dovish Fed rate path could drive buyer demand for DAX-listed stocks.

However, the ISM Services PMI also warrants investor attention. Economists forecast the ISM Services PMI to increase from 51.4 to 52.0 in April. Hotter-than-expected numbers could signal upward consumer price trends. Investors should consider the sub-components, including employment, new orders, and input prices.

Near-Term Outlook

Near-term trends for the DAX will hinge on corporate earnings and the US economic calendar. Rising bets on a September Fed rate cut could drive buyer demand for DAX-listed stocks. However, investors should also monitor ECB commentary. Views on interest rate cuts beyond June would move the dial.

On the Futures markets, the DAX and the Nasdaq mini were up 46 and 115 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX return to 18,000 would give the bulls a run at the 18,200 handle. A break above the 18,200 handle would bring the 18,350 handle into play.

Corporate earnings, Eurozone unemployment, the US Jobs Report, and ISM Services PMI need consideration.

However, a DAX drop below the 50-day EMA would give the bears a run at the 17,615 support level.

The 14-day RSI at 47.21 suggests a DAX fall to the 17,615 support level before entering oversold territory.

4-Hourly Chart

The DAX remained below the 50-day EMA while hovering above the 200-day EMA, affirming the bearish near-term but bullish longer-term price signals.

A DAX breakout from the 50-day EMA could give the bulls a run at the 18,200 handle.

Conversely, a DAX break below the 17,800 handle could signal a drop to the 200-day EMA and the 17,615 support level.

The 14-period 4-hour RSI at 42.88 suggests a DAX break below the 200-day EMA before entering oversold territory.