DAX Index Today: Eurozone Inflation, US ISM Services PMI, and the Fed in Focus

Overview of the DAX Performance on Tuesday

The DAX slid by 1.13% on Tuesday. Reversing a 0.08% gain from Thursday, the DAX ended the session at 18,283. Significantly, the DAX rose to a new all-time high of 18,567 before ending an eight-day winning streak.

German Manufacturing and Inflation in Focus

The German Manufacturing PMI fell from 42.5 to 41.9 in March, impacting buyer demand for DAX-listed stocks. Demand weakened at the end of the first quarter, aligning with recent downward revisions to German growth forecasts.

Later in the session, German inflation supported investor bets on a June ECB rate cut. The annual inflation rate fell from 2.5% to 2.2% in March. Falling energy prices contributed to the softer inflation rate.

US Economic Calendar: US Labor Market Data and US Factory Orders

The JOLTs Job Openings Report and factory orders impacted investor bets on a June Fed rate cut. Job openings increased from 8.748 million to 8.756 million in February. Job quits rose from 3.446 million to 3.484 million. Upward trends in openings and quits pointed to a positive outlook for the US labor market.

Factory orders advanced by 1.4% in February after sliding by 3.8% in January.

The Tuesday Market Movers

Auto stocks had a negative start to the second quarter. BMW and Volkswagen saw losses of 0.29% and 0.11%, respectively. Mercedes Benz Group and Porsche ended the session down 0.46% and 0.31%, respectively.

Tech stocks contributed to the losses. Infineon Technologies and SAP declined by 2.36% and 1.88%, respectively. Rising bond yields impacted the tech sector.

Retail stocks joined the broader market in negative territory. Zalando SE slid by 3.13%, with Adidas falling by 2.22%.

Eurozone Inflation in the Spotlight

On Wednesday, Eurozone inflation figures for March could influence bets on a June ECB rate cut. Economists forecast the annual core inflation rate to soften from 3.1% to 3.0%. Softer-than-expected core inflation figures could drive buyer demand for DAX-listed stocks.

However, the inflation numbers may not be enough to cement a June ECB rate cut. Service sector PMI numbers on Thursday need to show a pullback in price trends to signal an imminent ECB rate cut.

Other stats include Eurozone unemployment numbers. The unemployment figures will likely play second fiddle to the inflation figures.

US Economic Calendar: ADP Employment, Services, and the Fed

The US labor market will be in the spotlight again. On Wednesday, ADP employment figures for March warrant investor attention.

Better-than-expected numbers could further temper bets on a June Fed rate cut and impact demand for DAX-listed stocks. Economists forecast the ADP to report a 148k increase in employment. The ADP reported a 140k increase in February.

Moreover, the ISM Services PMI will also draw investor interest. A pickup in service sector activity could see investors cut bets on an H1 2024 Fed rate cut. Economists expect the ISM Services PMI to increase from 52.6 to 52.7 in March. The employment and prices sub-components need consideration.

Beyond the numbers, Fed Chair Powell is on the calendar to speak. FOMC members Austan Goolsbee, Michael Barr, Michelle Bowman, and Adriana Kugler will also deliver speeches. Views on the timing of a Fed rate cut could impact demand for DAX-listed stocks.

Short-term Forecast

Near-term trends for the DAX will depend on Eurozone inflation, Services PMIs, US labor market data, and central bank chatter. A hotter-than-expected US Jobs Report could overshadow market-friendly data from the euro area.

In the futures markets, the DAX and the Nasdaq Mini were down 20 and 27 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX return to the 18,500 handle could support a break above the April 2 all-time high of 18,567.

Eurozone inflation data, ECB comments, US stats, and Fed Chair Powell will influence buyer appetite for DAX-listed stocks.

A drop below the 18,250 handle could bring sub-18,000 levels into play.

The 14-day RSI at 69.49 shows the DAX on the border with overbought territory. Selling pressure may intensify at the 18,500 handle.

4-Hourly Chart

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

A DAX move to the 18,500 handle would support a break above the all-time high of 18,567.

Conversely, a drop below the 18,250 handle could bring sub-18,000 into view.

The 14-period 4-hour RSI at 51.85 suggests a DAX move to the all-time high of 18,567 before entering overbought territory.