DAX Index Today: Navigating DAX Market Trends in Light of ECB and Fed Chatter

The Overview of the DAX Performance

The DAX advanced by 0.06% on Thursday (May 23). Partially reversing a 0.25% loss from Wednesday (May 22), the DAX ended the session at 18,691.

German Private Sector PMIs Signal an Improving Economic Backdrop

The German private sector was in the spotlight on Thursday (May 23), with preliminary private sector PMIs attracting investor attention.

In May, the HCOB Services PMI increased from 53.2 to 53.9, with the Manufacturing PMI rising from 42.5 to 43.1. As a result, the HCOB Composite PMI increased from 50.6 to 52.2. The PMIs beat forecasts, driving buyer demand for DAX-listed stocks.

US Jobless Claims and Services PMI Sink September Fed Rate Cut Bets

Economic data from the US also warranted investor attention. US initial jobless claims fell from 223k to 215k in the week ending May 18. Furthermore, the S&P Global Services PMI rose from 51.3 to 54.8.

The better-than-expected data reduced investor bets on a September Fed rate cut, affecting buyer demand for riskier assets.

On Thursday (May 23), the Dow slid by 1.53%. The Nasdaq Composite Index and S&P 500 declined by 0.39% and 0.74%, respectively. NVIDIA (NVDA) earnings results limited the downside for the Nasdaq and S&P 500.

The Thursday Market Movers

Tech stocks advanced as investors reacted to earnings results from NVIDIA. Infineon Technologies and SAP saw gains of 0.95% and 1.14%, respectively.

However, Auto stocks extended their losses from Wednesday (May 22). Investors continued to fret about possible China tariffs.

BMW and Porsche saw losses of 1.13% and 0.52%, respectively. Volkswagen fell by 0.34%, with Mercedes Benz Group declining by 0.08%.

Retail stocks also ended the session in the red. Adidas and Zalando SE slid by 1.11% and 1.82%, respectively.

German GDP Numbers in Focus

On Friday (May 24), finalized GDP numbers from Germany will attract investor attention. According to preliminary numbers, the German economy expanded by 0.2% in Q1 2024 after contracting by 0.5% in Q4 2023.

Revisions to the preliminary numbers could influence buyer appetite for DAX-listed stocks.

Beyond the numbers, investors should consider ECB commentary. ECB President Christine Lagarde and Executive Board member Isabel Schnabel are on the calendar to speak. Views on post-June interest rate cuts could move the dial.

US Economic Calendar: Durable Goods Orders, Michigan Consumer Sentiment, and the Fed

Later in the Friday session, US core durable goods orders and the University of Michigan Survey of Consumers will warrant investor attention.

According to the preliminary survey, the Michigan Consumer Expectations Index fell from 77.2 to 67.5 in May. Furthermore, the Michigan Inflation Expectations Index increased from 3.2% to 3.5%. Revisions to the preliminary numbers may influence investor sentiment toward the Fed rate path.

Additionally, economists expect core durable goods orders to increase by 0.1% in April after rising by 0.2% in March.

Beyond the numbers, investors should monitor FOMC member commentary. FOMC member Christopher Waller is on the calendar to speak. Views on the recent Services PMI, inflation, and the timing of a Fed rate cut need consideration.

Near-Term Outlook

Near-term trends for the DAX will hinge on the German GDP numbers and the US economic data. However, ECB and Fed commentary remains pivotal for riskier assets. ECB support for post-June rate cuts could counter hawkish Fed commentary.

On the Futures markets, the DAX was down 81 points, while the Nasdaq mini advanced by 31 points.

DAX Technical Indicators

Daily Chart

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

A DAX break above the 18,750 handle would support a move toward the May 15 all-time high (18,893). A DAX rise above the all-time high could give the bulls a run at the 20,000 handle.

German GDP numbers, US core durable goods, University of Michigan data, and central bank chatter need consideration.

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

The 14-day RSI at 60.77 suggests a move to the May 15 all-time high before entering overbought territory.

4-Hourly Chart

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

A DAX break above the 18,750 handle could signal a move toward the all-time high (18,893).

Conversely, a DAX fall through the 18,650 handle could give the bears a run at the 18,500 handle.

The 14-period 4-hour RSI at 51.45 suggests a DAX return to the May 15 all-time high before entering overbought territory.