DAX Index Today: Eurozone Investor Confidence in Focus Amid ECB and Fed Chatter

Overview of the DAX Performance on Monday

The DAX rose by 0.32% on Friday. Following a 0.44% gain on Thursday, the DAX ended the session at 17,735. Significantly, the DAX reached an all-time high of 17,817. On Friday, the DAX extended the winning streak to eight sessions.

Services PMIs, Eurozone Inflation, and Earnings Influenced

On Friday, private sector PMIs from China set the tone for the session. The Caixin Manufacturing PMI contributed to a positive Asian market session, rising from 50.8 to 50.9 in February.

However, upward revisions to preliminary euro area Manufacturing PMIs had a limited impact, with Eurozone inflation in the spotlight.

The German Manufacturing PMI declined from 45.5 to 42.5 in February, up from a preliminary 42.3. The Eurozone Manufacturing PMI slipped from 46.6 to 46.5, up from a preliminary 46.1.

More significantly, the core inflation rate for the Eurozone eased from 3.3% to 3.1% in February. The annual rate fell from 2.8% to 2.6%. Economists forecast core inflation and inflation rates of 2.9% and 2.5%, respectively.

The hotter-than-expected inflation figures eased bets on an April ECB rate hike, pressuring the DAX.

However, corporate earnings and rising bets on an H1 2024 Fed rate cut supported a positive end to the session.

US Economic Calendar Supported Bets on a June Fed Rate Cut

On Friday, ISM Manufacturing PMI and Michigan Consumer Sentiment Reports supported investor bets on a June Fed rate cut.

The ISM Manufacturing PMI declined from 49.1 to 47.8 in February. Significantly, the ISM Manufacturing Prices Index fell from 52.9 to 52.5.

In February, the Michigan Consumer Sentiment Index fell from 79.0 to 76.9, down from a preliminary 79.6. The Michigan Consumer Expectations Index declined from 77.1 to 75.2, down from a preliminary 78.4.

10-year US Treasury yields reacted to the reports, ending the session down 1.60% to 4.184%. The pullback in yields drove demand for riskier assets.

On Friday, the Dow ended the day up 0.23%. The Nasdaq Composite Index and the S&P 500 saw gains of 1.14% and 0.80%, respectively.

The Friday Market Movers

Daimler Truck Holding surged 18% on better-than-expected earnings, a dividend hike, and a positive outlook for 2024.

Tech stocks benefited from sentiment toward a June Fed rate cut. Infineon Technologies gained 2.69%, with SAP ending the session up 0.27%.

Shifting sentiment toward the timeline for an ECB rate cut supported bank stocks. Commerzbank and Deutsche Bank saw gains of 1.54% and 1.65%, respectively.

However, Volkswagen slid by 4.93%. Investors reacted to a weaker sales outlook for 2024. Porsche also ended the session in negative territory, falling 0.59%. However, Mercedes-Benz Group and BMW rose by 0.53% and 0.61%, respectively.

Eurozone Investor Confidence in Focus

On Monday, the Eurozone Sentix Investor Confidence Index will draw investor interest. Economists forecast the Index to increase from -12.9 to -10.8 in March. A less pessimistic outlook toward the Eurozone economy would support the appetite for DAX-listed stocks. However, the numbers are unlikely to influence the ECB interest rate trajectory.

Investors must track ECB chatter throughout the session, with the ECB’s interest rate decision looming. Inflation figures from Friday shifted the timeline for an ECB rate cut to June. Views on inflation, the economy, and interest rates would move the dial.

US Economic Calendar: Fed Speakers in the Spotlight

On Monday, investors must consider Fed speeches. Calls for patience vis-à-vis cutting interest rates could test bets on a June Fed rate cut.

According to the CME FedWatch Tool, the probability of a 25-basis point June rate cut rose from 52.3 to 52.8 in the week ending March 1.

There are no economic stats for investors to consider on Monday.

Short-term Forecast

Near-term trends for the DAX will hinge on services PMIs, the ECB monetary policy decision, and Fed Chair Powell. More hawkish-than-expected ECB and Fed guidance could test bets on H1 2024 rate cuts. However, US labor market data could also influence.

On Monday, the DAX futures and the Nasdaq mini were up 19 and 14 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX breakout from the Friday all-time high of 17,817 would give the bulls a run at the 18,000 handle.

Eurozone economic data, the ECB, and the Fed need consideration.

A break below the 17,700 handle would support a fall toward the 17,500 handle.

The 14-day RSI at 78.79 shows the DAX in overbought territory. Selling pressure could intensify at the ATH of 17,817.

4-Hourly Chart

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

A DAX break above the 17,817 all-time high would support a move toward the 18,000 handle.

However, a DAX drop below the 17,700 handle would give the bears a run at the 17,500 handle.

The 14-period 4-hour RSI at 76.96 shows the DAX sitting in overbought territory. Selling pressure could intensify at the all-time high of 17,817.