DAX Index Today: Lagarde, US Economic Indicators, and 18,300

Overview of the DAX Performance on Friday

The DAX gained 0.15% on Friday. Following a 0.91% rally on Thursday, the DAX ended the Friday session at 18,206. Significantly, the DAX climbed to an all-time high of 18,226.

German Business Sentiment Improved in March

On Friday, the German economy was in the spotlight. The Ifo Business Climate Index climbed from 85.7 to 87.8 in March. Sentiment across the manufacturing sector improved significantly, with businesses less pessimistic about the outlook. Sentiment across the services and trade sectors also improved, with firms having less negative views about the economic outlook.

Improving business sentiment and ECB commentary, supporting an H1 2024 interest rate cut, drove demand for DAX-listed stocks. ECB President Lagarde said inflation would likely continue falling while expecting economic conditions to improve in 2024.

There were no US economic stats for investors to consider on Friday. However, Fed commentary tested market risk sentiment later in the European session. FOMC member Raphael Bostic tweaked his outlook for interest rate cuts, supporting a single rate 25-basis point interest rate cut. Bostic previously favored two interest rate cuts.

On Friday, the Dow and S&P 500 saw losses of 0.77% and 0.14%, respectively. The Nasdaq Composite ended the day up 0.16%.

The Friday Market Movers

Tech stocks tracked the Hang Seng Index into negative territory. Infineon Technologies slid by 2.12%, with SAP declining by 0.16%.

However, Siemens Energy AG led the way, surging by 4.05%. Retail stocks benefitted from views on the economic outlook and ECB rate path. Online retailer Zalando SE rallied 2.45%, with Adidas gaining 0.53% despite Nike (NKE) warning of lower revenue in H1 2025.

However, auto stocks had a mixed end to the week. Porsche gained by 0.93%. Volkswagen and Mercedes Benz Group ended the day up 0.25% and 0.22%, respectively. BMW bucked the trend, declining by 0.65%.

ECB Remains in the Spotlight on Rising Bets on an H1 2024 Rate Cut

On Monday, ECB President Christine Lagarde is on the calendar to speak. After the market-friendly comments on Friday, support for a June rate cut could influence the appetite for riskier assets.

On Friday (March 22), Bundesbank President Joachin Nagal joined a growing list of central bankers supporting a June rate cut.

However, there are no stats for Germany or the Eurozone to consider.

Chicago Fed and Dallas Fed Data, New Home Sales, and Fed Speakers

Later in the session, the US economic calendar could influence market risk sentiment. The Chicago Fed National Activity Index and Dallas Fed Manufacturing Index could influence expectations of a soft landing.

Economists expect the Chicago Fed National Activity Index to decline by 0.9% in February. However, economists forecast the Dallas Fed Manufacturing Index to rise from -11.3 to -8.0 in March. The Dallas Fed numbers could garner more interest, being more current.

The US housing sector will also draw investor interest. Economists consider the US housing sector a barometer of the US economy. Improving housing sector conditions could support consumer confidence, fueling consumer spending.

Economists forecast new home sales to increase by 3.0% in February after rising by 1.5% in January.

Beyond the numbers, FOMC members Raphael Bostic and Lisa Cook are on the calendar to speak. Rate cut expectations that deviate from the FOMC Economic Projections could move the dial.

Short-term Forecast

Near-term trends for the DAX will hinge on central bank chatter and German retail sales and unemployment numbers. Support for ECB and Fed H1 2024 rate cuts could deliver the DAX another new all-time high. An improving German macroeconomic environment could also drive demand for riskier assets.

In the futures, the DAX was up 19 points, while the Nasdaq mini was down by 1 point.

DAX Technical Indicators

Daily Chart

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

A DAX breakout from the March 22 all-time high of 18,226 would bring the 18,300 handle into play.

Central bank commentary and US economic data need consideration.

Conversely, a fall through the 18,150 handle could signal a drop below the 18,000 handle.

The 14-day RSI at 81.78 shows the DAX in overbought territory. Selling pressure may intensify at the March 22 high of 18,226.

4-Hourly Chart

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

A DAX return to the March 22 all-time high of 18,226 could give the bulls a run at the 18,300 handle.

However, a drop below the 18,150 handle could signal a fall toward the 50-day EMA.

The 14-period 4-hour RSI at 74.39 shows the DAX in overbought territory. Selling pressure may intensify at the all-time high of 18,226.