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German Industrial Production, Earnings, and the Fed in Focus

The ECB Consumer Expectations Survey was also market-friendly. The survey showed consumers expecting a softer inflation outlook, supporting bets on an April ECB rate cut. Consumers expected inflation over the previous 12 months to fall from 7.6% to 6.9% in December. ECB Consumer Inflation Expectations over the next 12 months declined from 3.5% to 3.2%.

However, corporate earnings and a pullback in government bond yields also contributed to the gains.

US RCM/TIPP Economic Conditions Index and Earnings

On Tuesday, the US economic and earnings calendar garnered investor interest. The RCM/TIPP Economic Optimism Index unexpectedly declined from 44.7 to 44.0 for February. Consumer sentiment toward the US economy declined despite the recent Jobs Report and ISM Services PMI survey.

However, the report failed to affect market risk sentiment. US corporate earnings contributed to gains across the European and US equity markets.

Eli Lilly (LLY) released better-than-expected fourth-quarter earnings.

On Tuesday, the Dow and the S&P 500 rose by 0.37% and 0.23%, respectively. The Nasdaq Composite Index gained 0.07%. 10-year US Treasury yields declined by 1.39%, contributing to the session gains.

The Tuesday Market Movers

Siemens Energy AG was among the front-runners, rallying 3.33%.

Auto stocks had a mixed session. BMW and Mercedes Benz Group saw gains of 1.03% and 1.23%, respectively. However, Porsche and Volkswagen ended the day down 0.50% and 0.87%, respectively.

Deutsche Bank lost further ground, falling 1.49%. Analyst views on UBS profit targets likely contributed to the downside.

However, Infineon Technologies was the worst performer, sliding by 3.04%. Investors reacted to weaker-than-expected revenue figures attributable to a deterioration in chip demand.

The Wednesday Session: German Industrial Production and Earnings in Focus

On Wednesday, German industrial production numbers for December will garner investor interest. Better-than-expected numbers could drive demand for DAX-listed stocks. Economists forecast industrial production to decline by 0.4% after falling by 0.7% in November.

While the numbers will draw interest, corporate earnings remain the focal point.

Deutsche Boerse and Siemens Energy AG are big names to release earnings results.

Beyond the numbers, investors must also consider ECB commentary. Support for an April ECB rate cut could support the appetite for riskier assets.

On Tuesday, the Spanish Central Bank Governor Pablo Hernandez de Cos voiced his confidence the next ECB policy move would be a rate cut. In contrast, Croatian Central Bank Governor Boris Vujcic called for patience on cutting rates. The contrasting views highlight the uncertainty about the timing of an ECB rate cut.

US Calendar: US Trade, Fed Speakers, and Earnings

On Wednesday, US trade data for December will draw investor interest. Economists forecast the US trade deficit to narrow from $63.2 billion to $62.2 billion in December. However, import and export numbers could give investors a view of the global demand environment.

Beyond the numbers, investors must track Fed speakers. FOMC members Adriana Kugler and Susan Collins are on the calendar to speak on Wednesday. Voting member Adrian Kugler could have more influence. Reactions to the US Jobs Report, ISM Services PMI, and the outlook for interest rates would move the dial.

From the US economic calendar, Uber Technologies (UBER), CVS Health Corp. (CVS), Fox Corp. (FOX), The Walt Disney Co. (DIS), PayPal Holdings Inc. (PYPL), and Mattel Inc. (MAT) are among the big names to release earnings.

Short-term Forecast

Near-term trends for the DAX will likely hinge on corporate earnings and central bank chatter. Better-than-expected earnings could offset more hawkish-than-expected central bank commentary. However, economic indicators from Germany and the US could also move the dial.

On Wednesday, the DAX futures were down 6 points, while the Nasdaq mini gained 4.5 points.

DAX Technical Indicators

Daily Chart

The DAX remained well above the 50-day and 200-day EMAs, affirming bullish price signals.

A DAX break above the Tuesday all-time high of 17,050 would support a move toward 17,100.

On Wednesday, German industrial production, corporate earnings, and Fed chatter need consideration.

However, a fall below the 16,850 handle would give the bears a run at the 16,750 handle.

The 14-day RSI at 64.72 suggests a DAX move above the ATH of 17,050 before entering overbought territory.


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Written by : Editorial team of BIPNs

Main team of content of bipns.com. Any type of content should be approved by us.

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