DAX Index Today: German Data and the US CPI Report to Influence Rate Cut Bets

Overview of the DAX Performance on Monday

The DAX fell by 0.38% on Monday. Following a 0.16% decline on Friday, the DAX ended the session at 17,746.

China Producer Prices and Vehicle Sales Highlight Weak Demand

On Monday, economic indicators from China influenced market risk sentiment. Inflation numbers from the weekend sent mixed signals. Consumer prices in China increased by 0.7% year-on-year in February after falling by 0.8% in January.

However, producer prices were down 2.7% year-on-year versus 2.5% in January. A surge in consumption during the Lunar New Year may have fueled consumer price inflation. Producer price trends signaled a weakening demand environment.

Early in the European session, vehicle sales figures from China also highlighted the weak demand environment. Vehicle sales were down 19.9% year-on-year in February. In January, vehicle sales were up 47.9% year-on-year.

There were no economic indicators from Germany to influence investor sentiment on Monday.

US Consumer Inflation Expectations Suggest a Sticky CPI Report

On Monday, US consumer inflation expectations drew more interest than normal. Consumer inflation expectations remained unchanged at 3.0% for the one-year outlook. However, consumer inflation expectations were higher for the three-year and five-year outlooks.

Other components of the New York Fed Report were also negative. Consumers were less optimistic about finding a job in the event of a job loss, while expectations of voluntary and involuntary job separations were higher.

There were no FOMC member speeches to consider. The FOMC entered the blackout period on Saturday, March 9.

On Monday, the Nasdaq Composite Index and the S&P 500 declined by 0.41% and 0.11%, respectively. The Dow gained 0.12%.

The Monday Market Movers on the DAX

Tech stocks were among the worst performers at the start of the week. Infineon Technologies and SAP ended the session down 1.65% and 1.93%, respectively. MTU Aero fell by 1.14%, with Siemens AG declining by 0.71%.

However, Continental AG led the losses, sliding 4.53% as investors reacted to the vehicle sales data from China. BMW and Mercedes-Benz Group saw losses of 0.24% and 0.21%, respectively. Porsche and Volkswagen bucked the trend, gaining 0.67% and 0.62%, respectively.

German Inflation and the ECB in Focus

On Tuesday, finalized inflation numbers from Germany will garner investor attention. According to preliminary figures, the annual inflation rate eased from 2.9% to 2.5% in February. Upward revisions could test buyer demand for DAX-listed stocks before the US CPI Report.

Beyond the numbers, ECB commentary also needs consideration. ECB Executive Board members Luis de Guindos and Claudia Buch are on the calendar to speak. Views on inflation and the timeline for an ECB rate cut could move the dial.

US Economic Calendar: The CPI Report

On Tuesday, the US CPI Report will be the focal point for investors. After the jump in nonfarm payrolls, sticky US inflation figures could test bets on an H1 2024 Fed rate cut.

Economists forecast the US annual inflation rate to remain unchanged at 3.1% in February. However, economists expect the core inflation rate to soften from 3.9% to 3.7%.

Fed Chair Powell fueled bets on an H1 2024 Fed rate cut during testimony on Capitol Hill. However, the Fed Chair discussed rate cuts later in the year. Hotter-than-expected numbers could unwind bets on an H1 2024 rate cut and impact buyer demand for DAX-listed stocks.

DAX Short-term Forecast

Near-term trends for the DAX will likely hinge on the German inflation numbers and the US CPI Report. Hotter-than-expected inflation figures could impact bets on H1 2024 ECB and Fed rate cuts. Falling bets on H1 2024 ECB and Fed rate cuts would bring 17,500 into view.

On Tuesday, the DAX futures and the Nasdaq mini were up 90 and 83 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX move to the Thursday all-time high of 17,879 would give the bulls a run at the 18,000 handle.

German and US inflation numbers for February need consideration.

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

The 14-day RSI at 71.29 shows the DAX in overbought territory. Selling pressure may intensify at the Thursday ATH of 17,879.

4-Hourly Chart

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

A DAX return to the 17,879 all-time high would support a move to the 18,000 handle.

However, a DAX break below the 17,700 handle would bring the 17,500 handle into play.

The 14-period 4-hour RSI at 57.57 indicates a DAX move to the all-time high of 17,879 before entering overbought territory.