DAX Index Today: German Consumer Confidence and Inflation in Focus

The Overview of the DAX Performance

The DAX declined by 0.52% on Tuesday (May 28). Reversing a 0.44% gain from Monday (May 27), the DAX closed the session at 18,678.

German Wholesale Prices Signal Improving Demand

German wholesale prices declined less than expected in April, signaling a pickup in demand. Wholesale prices were down 1.8% year-on-year compared with 2.6% in March.

Wholesale price trends aligned with recent private sector PMI numbers for May that signaled an improving demand environment.

Nevertheless, the ECB Consumer Expectations Survey countered the better-than-expected wholesale price figures. The April Survey showed consumers reducing their inflation expectations for the next 12 months from 3.0% to 2.9%.

However, the US economic calendar impacted buyer demand for DAX-listed stocks more.

US Consumer Confidence and FOMC Member Neel Kashkari

An unexpected rise in the US CB Consumer Confidence Index and hawkish Fed chatter dragged the DAX into negative territory.

The CB Consumer Confidence Index increased from 97.0 to 102.0 in May. Both the sentiment toward the present situation and the outlook improved.

FOMC member Neel Kashkari also pressured the investor appetite for riskier assets. The Minneapolis Fed President wanted to see significant progress on inflation before supporting rate cuts.

The Tuesday Market Movers

Auto stocks extended their gains from Monday. Volkswagen rallied 2.41%, with Porsche advancing by 0.84%. BMW and Mercedes Benz Group rose by 0.11% and 0.14%, respectively.

Symrise AG ended the Tuesday session up 1.27% as investors reacted to a Deutsche Bank stock upgrade to buy.

Siemens Energy AG led the way, surging 4.03%.

However, Deutsche Boerse slid by 2.57%, with SAP and MTU Aero seeing losses of 1.77% and 1.84%, respectively.

German Consumer Confidence and Inflation

On Wednesday, German consumer confidence and inflation numbers warrant investor attention.

Economists forecast the GfK Consumer Confidence Index to increase from -24.2 to -22.5 in June. An upswing in consumer confidence could boost buyer demand for DAX-listed retail stocks.

However, inflation numbers will likely attract the attention of the ECB. Economists expect the annual inflation rate to increase from 2.2% to 2.4%. Hotter-than-expected numbers could sink hopes of a post-June ECB rate cut.

FOMC Member Speeches Need Monitoring

Later in the session, investors should track FOMC member speeches for views on inflation and interest rate cuts.

Recent speeches have been hawkish, impacting investor expectations of a September Fed rate cut. A more hawkish Fed could affect ECB plans to deliver multiple 2024 interest rate cuts.

There are no US stats to consider, with investors likely to turn their attention to the US Personal Income and Outlays Report (May 31).

Near-Term Outlook

Near-term trends for the DAX will hinge on the Eurozone and US inflation numbers. Hotter-than-expected inflation figures could impact investor bets on rate cuts and buyer demand for riskier assets.

On the Futures markets, the DAX was down 79 points, while the Nasdaq mini was up by 4 points.

DAX Technical Indicators

Daily Chart

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

A DAX return to the 18,750 handle could signal a move toward the May 15 all-time high (18,893).

German consumer confidence, inflation, and central bank commentary need consideration.

However, a DAX break below the 18,650 handle could give the bears a run at the 18,500 handle.

The 14-day RSI at 58.40 indicates a return to the May 15 all-time high before entering overbought territory.

4-Hourly Chart

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

A DAX break above the 18,700 handle would support a move toward the all-time high (18,893).

Conversely, a DAX break below the 50-day EMA could signal a fall toward the 18,500 handle.

The 14-period 4-hour RSI at 49.56 indicates a DAX fall through the 18,500 handle before entering oversold territory.