DAX Set for a Bullish Open as Banking Jitters Ease Further

It was a bullish start to the week for the DAX, which rose by 1.14% to end the day at 15,128.

Banking sector jitters eased on Monday, with a quiet weekend and continued assurances from lawmakers delivering much-needed support.

Economic indicators from Germany supported a bullish session, though the upside was modest following disappointing stats from China.

In China, industrial profits tumbled 22.9% year-to-date in February versus a 4% decline in January. The numbers will question the optimistic outlook toward the post-zero COVID-policy Chinese economy.

Business Sentiment Unexpectedly Improves

The German Ifo Business Climate Index unexpectedly increased from 91.1 to 93.3 in March. Economists forecast a modest decline to 91.0. The Business Expectations and Current Assessment sub-Indexes contributed to the increase in the headline number.

In March, the German Business Expectations Index rose from 88.4 to 91.2, with the Current Assessment Index up from 93.9 to 95.4. Economists forecast the Current Assessment Sub-Index to rise from 93.9 to 94.1 while expecting the Business Expectations Sub-Index to fall from 88.5 to 88.3.

According to the March survey,

• Manufacturing companies were more satisfied with their current business situation, with sentiment seeing a marked improvement in the key industries, including automotive, chemical, electrical & electronics, and machinery & equipment.
• Manufacturers also reported little pessimism, supporting a pickup in the expectations component.
• Service sector companies were more satisfied with their current conditions, with the expectations component hitting its highest value since February 2022.

The latest figures will deliver the ECB relief, with businesses reportedly more satisfied with a more optimistic economic outlook than rising borrowing costs.

There were no US economic indicators to influence the DAX on Monday.

The Market Movers

It was a bullish Monday for the auto sector as investors shook off the latest stats from China and the PMI numbers from Friday. Daimler and Porsche led the way, rallying 2.63% and 2.48%, respectively. Volkswagen and BMW saw gains of 1.56% and 0.91%, respectively, with Continental rising by 0.31%

However, bank stocks led the way. Commerzbank and Deutsche Bank rose by 3.76% and 6.15%, respectively.

The Day Ahead for the DAX

It is a relatively quiet day ahead on the economic calendar. Business sentiment figures for Italy and France and French consumer confidence numbers will be in focus. However, barring a sharp deterioration in business sentiment, the stats should have a limited impact on the DAX.

Banking sector-related news and US economic indicators will provide direction.

Silicon Valley Bank will be in the spotlight today, with hearings on both sides of the pond likely to draw plenty of interest.

Bank of England and Fed responses to questioning will move the dial. Containment of the banking crisis and adequate tools to tackle banking sector woes would further ease investor jitters. However, the threat of a credit crunch remains, which could be a focal point.

Economic indicators from the US will also move the dial with consumer confidence in focus. A sharp decline in consumer confidence would weigh on the DAX.

On the monetary policy front, ECB President Lagarde will speak today.

DAX Technical Indicators

The DAX has to avoid the 15,111 pivot to target the First Major Resistance Level (R1) at 15,202. A move through the Monday high of 15,185 would signal a bullish session. However, the DAX would need the ECB and economic indicators from the US to support a bullish session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $15,276. The Third Major Resistance Level (R3) sits at 15,441.

A fall through the pivot would bring the First Major Support Level (S1) at 15,037 into play. However, barring a flight to safety, the DAX should avoid sub-$15,000 and the Second Major Support Level (S2) at 14,946. The Third Major Support Level (S3) sits at 14,781.

Looking at the EMAs and the 4-hourly chart, the EMAs send mixed signals. The DAX sits below the 50-day EMA (15,162). The 50-day EMA closed in on the 100-day EMA, while the 100-day EMA narrowed to the 200-day EMA, delivering mixed signals.

A move through the 50-day (15,162) and 100-day (15,187) EMAs would support a breakout from R1 (15,202) to give the bulls a run at R2 (15,276). However, failure to move through the 50-day EMA (15,162) would leave the Major Support Levels in play. 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 50 points, with the NASDAQ mini up 11.25. The Dow mini rose by 50 points.

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