German retail sales and Eurozone inflation both exceeded expectations, fueling concerns about ECB rate policy and potentially curtailing hopes for an aggressive rate cut.
Key Points
- DAX 40 is down 0.39%, weighed by mixed earnings and inflation concerns.
- U.S. election risks could pressure DAX with potential EU tariffs.
- Technicals indicate further downside, with DAX breaking key support levels.
DAX 40 Daily Price Analysis – 31/10/2024
The DAX 40 index is down 0.39% today, trading near the 19,172 level, following a 1.23% decline from the previous session. The ongoing bearish trend mirrors cautious sentiment across European markets, influenced by mixed corporate earnings, rising inflationary pressures, and subdued retail data. Despite solid GDP numbers earlier in the week, investors remain wary as inflation data raises questions about potential ECB rate policy adjustments.
Corporate Earnings and Market Pressure
Earnings reports from major global and European companies continue to influence DAX sentiment. Microsoft and Meta both reported a slowdown in growth and increased infrastructure spending on AI, which has led to a more conservative outlook among investors. Key DAX stocks facing declines include:
- Zalando (-2.6%)
- Siemens Energy (-2.4%)
- Rheinmetall (-0.6%)
- Adidas (-1.4%)
On the other hand, Airbus managed a 3.4% gain due to earnings and revenue surpassing forecasts, providing some support to the index. Nonetheless, the broader market trend remains weighted down as corporate earnings deliver mixed results across sectors.
Macroeconomic Insights: Inflation and Retail Sales
Recent economic data reveals robust but cautious economic growth in Germany and the Eurozone. German GDP grew by 0.2% in Q3, avoiding a recession, while Eurozone GDP increased by 0.4%. However, inflation and retail data have complicated the outlook for the DAX.
Today’s release of German retail sales and Eurozone inflation figures has cast a mixed shadow on market sentiment:
- German Retail Sales showed an unexpected gain of 1.2% in September, contrasting with the anticipated decline of 0.5%. This rise may signal resilient consumer demand, which could sustain inflationary pressures, potentially reducing the likelihood of an aggressive ECB rate cut.
- Eurozone Inflation reached 2.0% in October, aligning with Germany’s own 2.0% rate and marking a significant jump from September’s 1.7% rate. The ECB now faces increased pressure to address inflation, diminishing investor expectations for a substantial rate cut in December. A more cautious ECB stance could add downward pressure on the DAX as investors anticipate tighter monetary conditions.
External Geopolitical Influence: U.S. Presidential Election
In addition to economic and corporate factors, the U.S. Presidential Election looms as a potential disruptor. A Trump victory could reintroduce tariffs on EU goods, impacting DAX-listed companies and adding another layer of uncertainty for investors.
Key Economic Data and News to Be Released Today
With today’s release of German retail sales and Eurozone inflation data, there are no further major economic reports expected. These figures already provided crucial insights that could shape DAX movement in the immediate term, as they directly influence ECB rate expectations and investor sentiment.
DAX 40 Technical Analysis – 31/10/2024
DAx 40 seems like it’s going to drop some more today. A quick look at today’s price action shows that the index is trending significantly below the 200 exponential moving average. In addition, price is consistently breaking below key support levels, turning support levels into resistance levels.
The RSI equally suggests that the index still has enough room to keep diving deeper before getting oversold. So, in the short-term, sellers may be looking at a rejection off the key level 19207.02 with a bearish candlestick pattern confluence before entering a position.
Dax 40 Fibonacci Key Price Levels 31/10/2024
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 |
| 19207.02 | 19438.82 |
| 19135.42 | 19510.42 |
| 19019.52 | 19626.32 |
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.
