DAX Index Today: Eyes on German Factory Orders, ECB Press Conference

Overview of the DAX Performance on Wednesday

The DAX gained 0.10% on Wednesday. Reversing a 0.10% loss from Tuesday, the DAX ended the session at 17,717.

German Trade Signals Improved Demand Environment

On Wednesday, German trade data drew investor interest. The trade surplus widened from €22.2 billion to €27.5 billion in January. Exports surged 6.3% month-on-month after falling 4.1% in December. Imports increased by 3.6%.

Retail sales figures for the Eurozone had a limited impact on the DAX. Retail sales increased by 0.1% month-on-month in January after falling 0.6% in December.

US Labor Market Data and Fed Chair Powell Support Bets on an H1 2024 Fed Rate Cut

Later in the Wednesday session, US labor market data supported bets on an H1 2024 Fed rate cut. The ADP reported a 140k increase in employment in February after rising by 111k in January. Economists forecast a 150k increase.

Job openings also fell short of expectations. JOLTs job openings fell from 8.889 million to 8.863 million in January.

Weaker labor market conditions could impact wages, spending, inflation, and the Fed rate path.

Significantly, Fed Chair Powell raised hope of an H1 2024 Fed rate cut while warning monetary policy decisions will be data-dependent.

On Wednesday, the Dow rose by 0.20%. The Nasdaq Composite Index and the S&P 500 ended the day up 0.58% and 0.51%, respectively.

The Wednesday Market Movers

Symrise (AG) led the way, rallying 6.22% on upbeat forecasts for 2024.

Bayer partially recovered losses from Tuesday, gaining 2.66%. Rising bets on an H1 2024 Fed rate cut supported tech stocks. Infineon Technologies and SAP rose by 2.02% and 1.04%, respectively.

Retail-linked stocks also made gains, with Zalando SE and Adidas rising by 3.20% and 0.46%, respectively.

However, auto stocks were among the worst performers. Volkswagen slid by 2.00%, with BMW falling by 1.52%. Mercedes-Benz Group and Porsche saw losses of 1.23% and 1.24%, respectively.

German Factory Orders and the ECB Press Conference in Focus

On Thursday, German factory orders for January will warrant investor attention. After better-than-expected German trade figures, an unexpected pickup in factory orders could ease fears of a prolonged recession. Economists forecast factory orders to slide by 6.0% in January after surging 8.9% in December.

While factory orders will draw interest, the ECB monetary policy decision and press conference will be the main event.

Economists expect the ECB to hold interest rates at 4.50%. However, uncertainty about the timeline for an ECB rate cut lingers. ECB staff economic and inflation forecasts and views on the timeline for interest rate cuts will put the ECB press conference under the spotlight.

The markets expect an H1 2024 ECB rate cut. A more hawkish ECB rate path could impact the buyer demand for DAX-listed stocks.

US Economic Calendar: Initial Jobless Claims and the Fed

On Thursday, the US labor market will be in focus. After the ADP and JOLTs Job openings, an increase in jobless claims would raise bets on an H1 Fed rate cut.

However, the Fed will also need consideration. Fed Chair Powell will deliver the second day of Testimony on Capitol Hill. The second day of testimony tends to throw up very few surprises. Nonetheless, investors should monitor for deviation from the Wednesday script.

On Thursday, FOMC member Loretta Mester will also deliver a speech. Views on the timeline for Fed rate cuts need consideration.

Short-term Forecast

Near-term trends for the DAX will likely hinge on the ECB monetary policy decision and the US Jobs Report. More hawkish-than-expected ECB and hotter-than-expected Jobs Report could pressure the demand for DAX-listed stocks.

On Thursday, the DAX futures and the Nasdaq mini were down 8 and 31 points, respectively.

DAX Technical Indicators

Daily Chart

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

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

The ECB, US economic data, and Fed Chair Powell need consideration.

A drop below the 17,650 handle would bring the 17,500 handle into play.

The 14-day RSI at 76.34 shows the DAX in overbought territory. Selling pressure could intensify at the ATH of 17,817.

4-Hourly Chart

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

A DAX move through the 17,817 all-time high would give the bulls a run at the 18,000 handle.

However, a DAX fall through the 17,650 handle would bring the 17,500 handle into play.

The 14-period 4-hour RSI at 69.34 shows the DAX on the border of overbought territory. Selling pressure could intensify at the Friday high of 17,817.