DAX Index Today: Futures Flash Red on ECB and Fed Rate Cut Sentiment

The Overview of the DAX Performance

The DAX slid by 1.10% on Wednesday (May 29). Following a 0.52% loss on Tuesday (May 28), the DAX ended the session at 18,473.

German Inflation Numbers Test Post-June ECB Rate Cut Plans

Consumer confidence figures from Germany painted a rosier economic outlook. The German GfK Consumer Climate Indicator climbed from -24.0 to -20.9 for June. While sentiment toward the economic outlook improved, the willingness to buy remained subdued, sending mixed signals.

However, German inflation figures impacted DAX-listed stocks more. The annual inflation rate increased from 2.2% to 2.4% in May. Rising inflationary pressures could reduce investor bets on multiple post-June ECB rate cuts.

There were no US economic indicators to consider, with the US Personal Income and Outlays Report looming.

The Wednesday Market Movers

Siemens Energy AG tumbled by 4.02%. Infineon Technologies and Bayer declined by 3.19% and 3.19%, respectively.

Auto stocks joined the broader market in negative territory. BMW and Volkswagen slid by 2.11% and 2.03%, respectively. Porsche and Mercedes Benz Group saw losses of 1.67% and 1.37%, respectively.

Retail-related stocks bucked the trend. Zalando SE and Adidas saw gains of 2.16% and 0.33%, respectively. Better-than-expected consumer confidence numbers likely contributed to the gains.

Eurozone Unemployment and the ECB in Focus

Unemployment and economic sentiment numbers for the Eurozone will warrant investor attention on Thursday (May 30).

Economists forecast the unemployment rate to remain unchanged at 6.5% in April. Moreover, economists expect the Economic Sentiment Index to increase from 95.6 to 96.2 in May.

Tighter labor market conditions and a pickup in consumer confidence could fuel consumer spending and demand-driven inflation. The figures will likely attract the attention of the ECB. Better-than-expected numbers could test investor expectations of a post-June ECB rate cut.

Beyond the numbers, investors should consider ECB commentary. Views on inflation and the ECB interest rate trajectory could move the dial.

US GDP, Jobless Claims, and Fed Speakers

Later in the Thursday session, GDP and jobless claims figures from the US will attract investor attention.

According to the first estimate report, the US economy grew by 1.3% in Q1 2024 after expanding by 3.4% in Q4 2023. Upward GDP revisions could reduce investor bets on a September Fed rate cut.

Additionally, economists predict US initial jobless claims to increase from 215k to 218k in the week ending May 25. An unexpected fall in claims could affect Fed rate cut bets and demand for riskier assets.

Nevertheless, investors should monitor FOMC member commentary. Fed Vice Chair John Williams is on the calendar to speak during the European session. Comments regarding inflation and interest rates need consideration.

Near-Term Outlook

Near-term trends for the DAX will remain hinge on the looming Eurozone and US inflation numbers (Fri). Higher-than-expected inflation numbers could sink investor expectations of rate cuts and affect buyer demand for riskier assets.

On the Futures markets, the DAX and the Nasdaq mini were down 55 and 121 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX break above the 18,500 handle could give the bulls a run at 18,650. A return to the 18,650 handle could bring the May 15 all-time high (18,893) into play.

Eurozone unemployment and economic sentiment numbers need consideration alongside the US economic calendar.

However, a DAX drop below 18,400 could signal a drop toward the 50-day EMA.

The 14-day RSI at 49.35 suggests a break below the 50-day EMA 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 DAX break above the 50-day EMA would give the bulls a run at the 18,650 handle.

Conversely, a DAX drop below the 18,400 handle could give the bears a run at the 200-day EMA.

The 14-period 4-hour RSI at 34.51 suggests a DAX fall drop below the 18,400 handle before entering oversold territory.