DAX Index Today: German Wholesale Prices, ECB Rate Cut Signals, and 19,000

The Overview of the DAX Performance

The DAX advanced by 0.44% on Monday (May 27). Following a 0.01% gain on Friday (May 24), the DAX closed the session at 18,775.

German Business Sentiment Holds Steady in May

On Monday, the German Ifo Business Climate Index attracted investor attention, holding steady at 89.3 in May.

The Ifo Expectations Index increased from 89.7 to 90.4, while the Ifo Current Conditions fell from 88.9 to 88.3. Economists forecast increases to 90.5 and 90.3, respectively. The uptrend in the Expectations Index was DAX price positive.

The headline Index contrasted with recent German PMI survey-based numbers. The private sector PMI numbers for May showed an improving demand environment, driving business optimism to its highest level since February 2022.

However, ECB commentary also needed investor consideration. ECB Chief Economist Philip Lane signaled a June interest rate hike while calling for post-June caution.

There were no US economic indicators to consider, with the US markets closed for the Memorial Day holidays.

The Monday Market Movers

Auto stocks topped the DAX performance table. Porsche rallied 2.78%, with Volkswagen gaining 1.65%. BMW and Mercedes Benz Group ended the Monday session up 0.93% and 0.39%, respectively.

However, bank stocks ended the Monday session in negative territory. Commerzbank and Deutsche Bank declined by 0.48% and 0.09%, respectively.

German Wholesale Inflation and the ECB

German wholesale figures will warrant investor attention on Tuesday (May 28). The ECB remains vigilant over the risk of inflationary pressures resurfacing. Wholesalers increase prices in a rising demand environment, raising consumer prices and fueling demand-driven inflation.

Hotter-than-expected wholesale prices could impact investor hopes of post-June ECB rate cuts.

Economists forecast German wholesale prices to fall 2.2% year-on-year in April after declining 3.0% in March.

With inflation in focus, the ECB calendar also needs consideration. ECB Executive Board member Isabel Schnabel is on the calendar to speak. Views on inflation and post-June interest rate cuts may impact buyer demand for DAX-listed stocks.

Moreover, ECB Consumer Expectations Survey results will also draw investor interest. Consumer sentiment toward inflation, the labor market, and the economy may move the dial.

In the March survey, consumers expected inflationary pressures to soften. However, consumers predicted net income growth to weaken. Weaker wage growth could counter softer inflationary pressures and impact consumer spending and demand-driven inflation.

US Consumer Confidence and FOMC Member Speeches

Later in the Tuesday session, the US CB Consumer Confidence Index could influence the Fed rate path. Economists expect the CB Consumer Confidence Index to fall from 97.0 to 95.9 in May.

A pullback in consumer confidence could signal weaker consumer spending and a softer inflation outlook. Dampening inflationary pressures would support a September Fed rate cut and buyer demand for riskier assets. However, an Index drop below 90 could retrigger fears of a hard US landing and pressure buyer appetite for DAX-listed stocks.

Beyond the numbers, FOMC Member speeches need monitoring. FOMC members Loretta Mester and Neel Kashkari are on the calendar to speak during the European session.

Near-Term Outlook

Near-term trends for the DAX will depend on Eurozone and US inflation trends. Leading inflation indicators may influence the appetite for riskier assets before headline Eurozone and US inflation figures on Friday (May 31). Furthermore, ECB and Fed forward guidance also need consideration.

On the Futures markets, the DAX and the Nasdaq mini were up by 66 and 40 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX break above the 18,850 handle would support a move to the May 15 all-time high (18,893).

German wholesale prices, the ECB consumer expectations survey, and ECB chatter need consideration before the US session.

However, a DAX break below the 18,650 handle could signal a fall toward the 18,500 handle.

The 14-day RSI at 63.52 suggests a rise to the May 15 all-time high before entering overbought territory.

4-Hourly Chart

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

A DAX breakout from 18,000 could give the bulls a run at the all-time high (18,893).

Conversely, a DAX fall through the 50-day EMA could give the bears a run at the 18,500 handle.

The 14-period 4-hour RSI at 58.05 suggests a DAX rise to the May 15 all-time high before entering overbought territory.