DAX 40 gained 0.59% on Tuesday, trading at 18,993.01, driven by optimism surrounding potential ECB rate cuts despite weakening German economic data.
Key Points
- Zalando and Siemens Energy led gains, with auto stocks also rising on rate cut speculation.
- Commerzbank fell 5.68% following the German government’s rejection of a UniCredit bid.
- Weak PMI data heightened expectations of a Q4 ECB rate cut to support the economy.
DAX 40 Daily Price Analysis – 24/09/2024
The DAX 40 continues to show positive momentum in Tuesday’s session, with the index currently trading at 18,993.01, reflecting a +0.59% gain from Monday’s close at 18,886.95. Monday’s trading session saw a notable 0.77% rise, driven by investor optimism surrounding potential ECB rate cuts by Q4 2024, amid weakening German economic data and global uncertainties.
The upward trend in the DAX has been buoyed by notable performances from key sectors and individual companies. Zalando SE surged 3.17%, while Siemens Energy AG gained 2.88%. Investor sentiment around these companies improved on growing bets that the ECB might shift toward a more dovish monetary policy stance later this year. Additionally, auto stocks benefitted from the easing rate cut expectations. BMW advanced by 2.44%, and Volkswagen and Mercedes-Benz Group posted gains of 2.14% and 2.00%, respectively.
However, not all sectors benefited from the optimism. Commerzbank tumbled 5.68% following news of the German government’s rejection of a UniCredit bid, highlighting potential instability within the financial sector despite the broader market’s upward momentum.
PMI Data and Economic Concerns Weighing on the Market
Despite recent gains, underlying economic concerns remain significant. Monday’s private sector PMI data from Germany signaled ongoing challenges for the German economy. The HCOB Manufacturing PMI fell to 40.3 in September, marking a 12-month low and underscoring the sector’s contraction, while the HCOB Services PMI dropped to 50.6, a six-month low. These figures point to a sharp deceleration in both the manufacturing and services sectors, increasing expectations for a Q4 2024 ECB rate cut to stimulate the economy.
The prospect of continued weakness in Germany’s economy has kept investors focused on potential policy responses. The latest Ifo Business Climate Index for Germany came in weaker than expected, signaling further economic challenges for Europe’s largest economy. The Business Climate index fell to 85.4, below the expected 86.0, indicating that business sentiment has deteriorated more than anticipated.
The DAX’s recent gains may now face headwinds in response to this disappointing data. While the index has been riding on optimism surrounding rate cuts and strong performances from specific sectors, weak sentiment data like this could halt upward momentum.
In the short term, we could see the DAX test the 19,000 resistance level if rate cut expectations strengthen following this weaker Ifo report. However, if economic data continues to disappoint, there is growing downside risk, and the index could retest support around 18,500 in the coming sessions.
Another factor influencing the DAX 40’s trajectory is the upcoming US Consumer Confidence Index report. Economists expect a slight rise from 103.3 in August to 103.8 in September. A stronger-than-expected reading could signal robust US economic activity, reinforcing the narrative of a soft economic landing. This would likely push global equity markets higher, including the DAX. On the flip side, a disappointing consumer confidence reading could reignite concerns about a potential hard landing.
DAX 40 Technical Analysis – 24/09/2024
The Dax 40 Index is currently facing a significant around the 19,000 psychological level today. Despite that the price is trending reasonably above the 200 EMA, the RSI is signalling a caution against further upward market projections.
This mixed signal only means one thing: short-term traders should be careful. A better long entry for the index may be after the price will breakout above the key resistance level. On the other hand, traders who are looking to short the market can wait till the price closes below the 200 EMA. Until any of these happen, it’s not a good time to open a position.
Dax 40 Fibonacci Key Price Levels 24/09/2024
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 |
| 18744.76 | 18904.64 |
| 18695.37 | 18954.03 |
| 18615.43 | 19033.97 |
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
