The DAX gained 1.03% on Monday. Following a 0.07% rise on Friday, the DAX ended the day at 15,793.
Investors responded to further Beijing stimulus measures that delivered a positive Asian equity market session. Beijing announced plans to reduce stamp duty for stock trading on Sunday to support the Chinese equity markets.
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After previously announcing stimulus measures to support the real-estate sector, hopes of a more comprehensive stimulus package drove demand for riskier assets.
There were no economic indicators from Germany to spook investors. However, China’s economic backdrop, Fed Fear, and the risk of an extended German recession remain headwinds.
The NASDAQ rose by 0.84% on Monday, with the Dow and S&P 500 seeing gains of 0.62% and 0.63%, respectively.
Monday’s Market Movers
Bank and tech stocks led the way. UBS releases earnings on Thursday, with investors hoping for upbeat results. Commerzbank and Deutsche Bank ended the day up 2.46% and 2.38%, respectively.
Falling government bond yields and the NASDAQ Composite Index provided tech stock support. Infineon rose by 1.95%.
However, economic indicators from Germany and the US will impact both sectors. A slew of US economic indicators could fuel another surge in US Treasury yields, bearish for tech stocks.
Market bets on softer US inflation and a pullback in wage growth contributed to the Monday gains.
German and US Economic Indicators to Test Risk Appetite
A positive Asian session should drive buyer appetite at the European opening bell. The DAX 30 Futures avoided negative territory this morning, gaining 9 points.
However, German GfK Consumer Climate figures for September could test risk appetite. Economists forecast the Consumer Climate Index to rise from -24.4 to -24.3. A marked decline in consumer confidence would signal weaker consumption and weigh on retail stocks.
US economic indicators will likely have more impact on buyer appetite. US consumer confidence and JOLTs job openings are in focus.
An unexpected rise in consumer confidence and a jump in job openings would raise bets on a September rate hike, threatening the broader market. However, investors may hold out for the Core PCE Price Index, personal spending numbers, and the US Jobs Report before making a decisive move.
DAX Technical Indicators
While the 4-Hourly Chart affirms bearish near-term price signals, the technical indicators signal a change in sentiment.
The DAX held above the 50-day EMA on Monday, signaling a possible breakout to target the 16,000 – 16,080 resistance band. However, German consumer sentiment numbers need to show a more marked improvement in confidence, and the US stats need to ease bets on Fed rate hikes to support a breakout.
Hotter-than-expected US economic indicators would likely see the DAX fall through the 50-day EMA. A fall below 15,750 would bring the 15,600 – 15,525 support band into view.
However, considering the RSI 55.23 reading, the DAX has room to run before hitting overbought territory.
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