DAX Sees Green Ahead of Euro Area Industrial Production Stats

It was a bullish Tuesday session for the DAX, which rose 1.83% to end the day at 15,233.

US economic indicators and easing fears of other US regional banks succumbing to a similar fate to Silicon Valley Bank (SIVB) and Signature Bank (SBNY) supported riskier assets.

However, the DAX remains in negative territory going into the mid-week session. Investors will need upbeat stats from the euro area and market-friendly US stats to support the recovery.

Bank Risk and US Inflation Deliver DAX Support

It was a quiet European session, with no material stats from the euro area to influence investor sentiment. The lack of stats left Silicon Valley Bank (SIVB) and Signature Bank (SBNY) updates to deliver support, with the White House and regulators assuring investors of containment.

On Monday, US President Joe Biden reportedly said,

“Americans can rest assured that our banking system is safe. Your deposits are safe. Let me also assure you we will not stop at this. We will do whatever is needed on top of all this.”

US inflation figures for February contributed to the bullish mood. Softer inflation numbers eased bets of a 50-basis point Fed interest rate hike in March, supporting riskier assets.

In February, the annual inflation rate softened from 6.4% to 6.0%, in line with forecasts.

The Market Movers

It was a mixed day for the auto sector. Continental slipped by 0.03%, with Volkswagen and Porsche seeing losses of 1.58% and 1.41%, respectively. BMW and Daimler ended the day with gains of 1.01% and 1.59%, respectively.

Bank stocks had a particularly bullish session on easing Silicon Valley Bank contagion jitters. Deutsche Bank and Commerzbank rallied by 4.28% and 4.37%, respectively.

The Day Ahead for the DAX

It is a quiet day ahead on the economic calendar. Euro area industrial production numbers for January will draw interest. After the mixed industrial production numbers from Germany, hotter-than-expected figures for the euro area should deliver DAX support.

Easing Silicon Valley Bank (SIVB) and Signature Bank (SBNY) contagion should also continue providing support going into the US session.

Later today, US retail sales and wholesale inflation figures will move the dial. A spike in US wholesale inflation could force the markets to rethink the bets of a 25-basis point Fed rate hike in March. Softer inflation numbers and another rise in US retail sales would be DAX positive.

Technical Indicators

The DAX has to avoid the 15,152 pivot to target the First Major Resistance Level (R1) at 15,353. A move through the Tuesday high of 15,272 would signal a bullish session. However, the DAX would need today’s stats and ECB chatter to support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at 15,472 and resistance at 15,500. The Third Major Resistance Level (R3) sits at 15,792.

A fall through the pivot would bring the First Major Support Level (S1) at 15,033 into play. However, barring a US inflation-fueled sell-off, the DAX should avoid sub-$15,000 and the Second Major Support Level (S2) at 14,832. The Third Major Support Level (S3) sits at 14,512.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The DAX sits below the 100-day EMA (15,297). The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 100-day EMA (15,297) would support a breakout from R1 (15,353) to give the bulls a run at the 50-day EMA (15,388) and R2 (15,472). However, a fall through S1 (15,152) would bring the 200-day EMA (14,978) and S2 (15,832) into view. A move through the 50-day EMA would send a bullish signal.

The DAX Futures Sees Green

Looking at the futures markets, DAX was up 27 points, with the Dow mini rising by 3 points. The NASDAQ mini was up 18.5 points.

For a look at all of today’s economic events, check out our economic calendar.