DAX Index Today: Retail Sales, Unemployment Figures, and 18,650 in Focus

Overview of the DAX Performance on Wednesday

The DAX gained 0.50% on Wednesday. Following a 0.67% rally on Tuesday, the DAX ended the Tuesday session at 18,477. Notably, it reached an all-time high of 18,511, extending its winning streak to seven sessions.

Eurozone Sentiment Improves as Inflation Expectations Abate

On Wednesday, economic sentiment and consumer confidence numbers for the Eurozone drew investor interest. The Consumer Confidence Index increased from -15.5 to -14.9 in March, unchanged from the preliminary number. Sentiment toward the Eurozone economy also improved. The Economic Sentiment Index increased from 95.5 to 96.3.

Significantly, consumer inflation expectations fell from 15.4 to 12.3 in March, supporting bets on an ECB June rate cut.

ECB Executive Board member Piero Cipollone echoed recent commentary, signaling increasing confidence that inflation was pulling back toward the 2% target.

There were no US economic indicators for investors to consider on Wednesday. Despite mixed signals from Fed speakers in recent sessions, the US equity markets marched higher.

On Wednesday, the Nasdaq Composite Index and the S&P 500 saw gains of 0.51% and 0.86%, respectively. The Dow rallied 1.22%.

The Wednesday Market Movers

Online retailer Zalando SE led the way, rallying 4.46%. Better-than-expected H&M first quarter profits drove demand for retail-linked stocks. Improved consumer sentiment also contributed to the gains.

Deutsche Bank gained 2.68% as investors responded to Morgan Stanley (MS) upgrading the stock to overweight. Commerzbank ended the session up 0.75%.

Bets on a June ECB interest rate cut supported buyer demand for tech stocks. Infineon Technologies gained 0.38%.

However, auto stocks had a mixed session. Volkswagen and Mercedes Benz Group saw gains of 0.41% and 0.10%, respectively. BMW and Porsche declined by 0.38% and 0.26%, respectively.

German Retail Sales and Unemployment in the Spotlight

On Thursday, the German economy will be in the spotlight. Retail sales figures for February could give more clues on whether demand-driven inflation is easing toward the 2% target.

Economists forecast retail sales to decline by 0.8% year-on-year in February. In January, retail sales were down 1.4%.

Moreover, German unemployment figures could signal near-term trends for wage growth. Softer labor market conditions could support ECB expectations of wage growth trending lower. A deterioration in labor market conditions pressures wage growth due to less labor shortages.

Economists forecast the German unemployment rate to hold steady at 5.9% in March. However, economists expect unemployed persons to increase from 2.713 million to 2.733 million.

Beyond the numbers, investors must continue to track ECB commentary. Support for a June ECB rate cut could drive demand for DAX-listed stocks.

US Economic Calendar: GDP, Labor Market, and Consumer Sentiment

Later in the Thursday session, US economic indicators warrant investor attention. Finalized Q4 GDP and Michigan Consumer Sentiment numbers could move the dial.

Recent Fed speakers sent mixed signals about the timing of a Fed interest rate cut. Softer-than-preliminary numbers could raise bets on an H1 2024 Fed rate cut.

According to preliminary numbers, the US economy grew 3.2% quarter-on-quarter in Q4 compared with 4.9% in Q3. The Michigan Consumer Sentiment Index slipped from 76.9 to 76.5 in March.

However, US jobless claims also need consideration. Tighter labor market conditions may test optimism toward an H1 2024 Fed rate cut. Economists forecast US initial jobless claims to increase from 210k to 215k in the week ending March 23.

Beyond the numbers, investors should monitor FOMC member chatter. Earlier today, FOMC member Christopher Wallace warned about the risks of cutting interest rates too early.

Short-term Forecast

Near-term trends for the DAX will hinge on the German economic indicators and consumer price trends. Weaker retail sales and a deteriorating German labor market could support expectations of a June ECB rate cut. However, inflation numbers from the euro area remain pivotal to ECB policy moves.

In the futures, the DAX was up 44 points, while the Nasdaq mini was down by 5 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 break above the March 27 all-time high of 18,511 could signal a DAX move toward the 18,650 handle.

Central bank chatter, German economic data, and the US economic calendar need consideration.

A break below the 18,450 handle could signal a DAX fall through the 18,350 handle.

The 14-day RSI at 86.70 shows the DAX in overbought territory. Selling pressure may intensify at the March 27 high of 18,511.

4-Hourly Chart

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

A DAX break above the March 27 all-time high of 18,511 could give the bulls a run at the 18,650 handle.

Conversely, a fall through the 18,450 handle could bring sub-18,350 levels into play.

The 14-period 4-hour RSI at 81.95 shows the DAX in overbought territory. Selling pressure may intensify at the all-time high of 18,511.