DAX Index Today: Services PMIs in Focus Ahead of Powell and Lagarde

Overview of the DAX Performance on Monday

The DAX declined by 0.11% on Monday. Partially reversing a 0.32% gain from Friday, the DAX ended the session at 17,716. Significantly, the DAX ended an eight-day winning streak.

Investor Sentiment Toward the Eurozone Economy Improves

On Monday, Sentix Investor Confidence figures drew investor interest. Sentiment toward the Eurozone economy improved in March. The Sentix Investor Confidence Index climbed from -12.9 to -10.5. Economists forecast an increase to -10.8.

However, the report provided brief support to the DAX. Investors were mindful of the ECB policy decision and press conference (Thurs).

Hotter-than-expected Eurozone inflation numbers from Friday shifted bets on an ECB rate cut to June. The ECB could temper bets on an H1 2024 rate cut with an annual inflation rate of 2.6%.

US Equity Market Trends Pressured the DAX Ahead of Fed Chair Powell Testimony

There were no economic indicators from the US for investors to consider on Monday. However, the US equity markets retreated from all-time highs as investors looked ahead to Fed Chair Powell testimony on Wednesday and Thursday.

Fed Chair Powell has previously wrong-footed the markets. Tight labor market conditions and sticky inflation could leave the door open to another Powell surprise on Wednesday.

On Monday, the Nasdaq Composite Index declined by 0.41%. The Dow and the S&P 500 ended the day down 0.25% and 0.12%, respectively.

The Monday Market Movers

Daimler Truck Holding coughed up some of Friday’s 18% gains, sliding by 4.18%. The broader German auto sector had a mixed session. Porsche fell by 1.30%, with Mercedes-Benz Group declining by 0.47%.

BMW and Volkswagen bucked the trend, gaining 0.13% and 1.28%, respectively.

Investor angst over ECB and Fed monetary policy also impacted retail-linked and tech stocks.

Zalando SE and Adidas fell by 3.33% and 1.34%, respectively. Infineon Technologies declined by 1.19%.

German and Eurozone Services and Eurozone Producer Prices in Focus

On Tuesday, finalized Services PMIs for Germany and the Eurozone need investor consideration. Upward revisions could signal a shifting economic landscape. However, investors must consider the subcomponents, including prices and wages. Higher wages could influence the timeline for an ECB rate cut. The services sector remains the main contributor to euro area inflation.

According to preliminary numbers, the German Services PMI increased from 47.7 to 48.2 in February. The Eurozone Services PMI rose from 48.4 to 50.0.

With inflation and services being the areas of interest, producer prices for the Eurozone also warrant investor attention. Producers adjust prices depending on the demand environment. A continued pullback in producer prices could signal a downward trend in consumer price inflation.

Economists forecast producer prices to decline by 8.1% in January after falling by 10.6% in December.

US Economic Calendar: ISM Services PMI and the Fed

On Tuesday, ISM Services PMI numbers for February will garner investor interest. An unexpected pickup in service sector activity could reduce bets on a June Fed rate. Economists forecast the ISM Services PMI to fall from 53.4 to 53.0. However, investors must consider the sub-components, including prices and employment.

Beyond the numbers, investors must consider Fed speakers. Views on inflation and interest rate cuts need consideration.

Short-term Forecast

Near-term trends for the DAX remain hinged on services PMIs, Fed Chair Powell, and the ECB monetary policy decision. More hawkish-than-expected ECB and Fed guidance could impact buyer demand for DAX-listed stocks. Service sector PMIs could set the tone for central bank commentary.

On Tuesday, the DAX futures and the Nasdaq mini were down 42 and 56 points, respectively.

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 Friday all-time high of 17,817 would support a move to the 18,000 handle.

Service sector PMIs, euro area producer prices, and central bank chatter need consideration.

A drop below the 17,650 handle could support a fall to the 17,500 handle.

The 14-day RSI at 77.30 shows the DAX in overbought territory. Selling pressure could intensify at the ATH of 17,817.

4-Hourly Chart

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

A DAX move through the 17,817 all-time high would bring the 18,000 handle into play.

However, a DAX drop below the 17,650 handle would support a fall toward the 17,500 handle.

The 14-period 4-hour RSI at 73.26 shows the DAX sitting in overbought territory. Selling pressure may intensify at the all-time high of 17,817.