DAX Set for a Bearish Open on Pre-US PPI Report Inflation Jitters

Highlights

• It was a bullish Thursday for the DAX, gaining 0.91% to wrap up the day at 15,997.
• The US CPI Report delivered a breakout session despite sticky core inflation.
• Today, inflation numbers from France and US producer price index and consumer sentiment figures will provide direction.

It was a bullish Thursday for the DAX, which gained 0.91%. Following a 0.49% rise on Wednesday, the DAX ended the day at 15,997. Significantly, the DAX revisited the 16,000 handle for the first time since August 2.

There were no economic indicators from the Asian region or the euro area to influence. However, the US CPI Report delivered a late breakout to test resistance at 16,000. Despite the market-friendly CPI Report, gains across the US equity markets were modest.

The NASDAQ Composite Index rose by 0.12% on Thursday. The Dow and the S&P 500 saw gains of 0.15% and 0.03%, respectively.

US Consumer Price Report Delivered Support

There were no euro area economic indicators to consider, leaving the US CPI Report to influence.

The US CPI Report delivered a breakout afternoon session. The US annual inflation rate accelerated from 3.0% to 3.2%, while the core inflation rate softened from 4.8% to 4.7%. Significantly, the numbers were softer than expected. Economists forecast an annual and a core inflation rate of 3.3% and 4.8%, respectively.

Despite the softer numbers, inflation remains sticky, leaving investors mindful of a Fed threat to hike rates further to return inflation to target.

The Market Movers

It was a bullish session for the auto sector. Mercedes-Benz Group and Porsche rose by 1.19% and 0.87%, respectively. BMW and Volkswagen ended the day up 0.53% and 0.68%, respectively. Continental AG trailed the front runners, rising by 0.38%.

It was a bullish session for the banks. Commerzbank and Deutsche Bank saw gains of 0.78% and 1.48%, respectively.

However, Siemens AG and Siemens Energy AG were the worst performers, sliding by 4.79% and 3.11%, respectively. Siemens AG released its quarterly earnings, missing forecasts and reducing growth projections.

The Day Ahead for the DAX

It is a quiet start to the European session, with no economic indicators from China or Germany to move the dial.

However, the US PPI Report and consumer sentiment numbers will influence this afternoon. After the pickup in US consumer price inflation, hotter-than-expected producer price index numbers would fuel bets on a more hawkish Fed policy stance.

DAX Technical Indicators

Looking at the EMAs and the 4-hourly chart, the EMAs sent mixed signals. The DAX sat below the 50-day EMA (16,029) but moved through the 200-day EMA (15,953), sending bearish near-term but bullish longer-term price signals.

Significantly, the 50-day EMA narrowed to the 200-day EMA, sending bearish price signals and supporting a DAX return to sub-15,750 to bring the 15,600 – 15,525 support band into play.

However, a DAX move through the 50-day EMA (16,029) and the 16,000 – 16,080 resistance band would give the bulls a run at 16,200.

The 14-4H RSI sits at 50.83, signaling moderately bullish sentiment, with buying pressure overweighing selling pressure. Significantly, the RSI aligns with the 200-day EMA, supporting a move through the 50-day EMA to target 16,200.

For a look at the economic events, check out our economic calendar.