The DAX 40 saw a minor recovery today after a previous decline, with cautious optimism surrounding central bank rate cuts and upcoming US labor market data, but technical indicators suggest a bearish trend may continue throughout the day.
Key Points
- On Tuesday, the DAX 40 dropped by 0.48% because of weak global economic news and a drop in tech stocks.
- Today, it went back up by 0.20%, mostly because of gains in utility stocks and hopes for future rate cuts.
- Important US job market data, coming out later today, could change what people expect from central bank interest rates.
DAX 40 Daily Price Analysis – 05/09/2024
On Tuesday, the DAX 40 fell by 0.48%, ending the day at 18,569.70. This drop was mostly due to worries about the global economy. In the US, the manufacturing PMI came in at 46.4 for August, a sign that the sector is shrinking. This made investors worry about a bigger economic slowdown. Tech stocks, like Nvidia, were hit hard, with Nvidia’s stock falling 4.7% because of concerns about it being overvalued and problems with supply chains caused by the US-China tech competition. This dragged down other semiconductor stocks, which hurt the market overall.
In Germany, factory orders surprised everyone by going up 2.9% in July, even though experts expected a 1.5% drop. This shows that German manufacturing is still doing well despite global issues, giving some hope for the European economy. However, this good news from Germany isn’t enough to balance out the problems facing tech stocks and the overall economy. The struggles in the tech sector, along with political risks around the world, are keeping investors worried.
Meanwhile, inflation in the eurozone is still high, at 5.3% year-over-year. This makes it harder for the European Central Bank (ECB) to decide what to do next. The ECB might need to keep or even raise interest rates to fight inflation, even though many are hoping for rate cuts. If the ECB keeps raising rates, it could put more pressure on the DAX 40, especially since higher rates could make borrowing more expensive for businesses, affecting sectors like utilities and real estate.
Today, the DAX 40 rebounded by 0.20%, trading at 18,606.61. Gains were driven by utility stocks, which are benefiting from expectations that central banks might lower rates. However, if the central banks don’t cut rates or inflation stays high, utility stocks could be hurt. Investors are also worried about China’s slow economic recovery, which is affecting materials like metals, which have seen prices drop.
Key Economic Data and News to Be Released Today
US labor market data, scheduled to be released later today at 12:30 GMT, will be crucial in shaping interest rate expectations. If the data comes in stronger than expected, it could reignite concerns about inflationary pressures, prompting the Federal Reserve to maintain or even increase its current interest rate stance. This could lead to further downside for the DAX, as higher US interest rates typically strengthen the dollar, negatively impacting European exports and global equity markets.
On the other hand, a significant miss in the data could bolster expectations for rate cuts, offering potential support to the DAX and other global indices.
DAX 40 Technical Analysis – 05/09/2024
Looking at the technical picture, the DAX remains in a bearish zone. The price is trading below the 200 EMA, suggesting that bearish momentum is likely to continue. The RSI has also crossed below the 50 level, further confirming increased selling pressure.
Moreover, today’s price action shows that the index is reacting negatively to an intraday resistance level, closing below the daily pivot point. If the DAX fails to close above this pivot, we could see a continuation of the bearish trend, with the price potentially moving toward key support levels.
Dax 40 Fibonacci Key Price Levels 05/09/2024
Short-term traders planning to trade the Dax index today should keep a close eye on the following key price levels for the day:
| Support | Resistance |
| 18498.32 | 18637.69 |
| 18455.26 | 18680.75 |
| 18385.57 | 18750.43 |
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