Dax Index News: Forecast Hinges on PMI Data, ECB Minutes, and Fiscal News

DAX Tumbles as US Bond Sale Triggers Global Risk-Off Mood

The DAX opened sharply lower on Thursday, May 22, sliding 0.47% to 24,009 in early trading. A weak overnight US bond sale triggered a flight-to-safety. Rising US fiscal policy concerns drove 10-year US Treasury yields to a May 21 high of 4.609% before easing back, weighing on risk sentiment.

Sector Performance

Tech stocks faced selling pressure, with Infineon Technologies sliding 1.27% in early trading.

Auto stocks also struggled amid trade uncertainties. Volkswagen dropped 0.93%, with BMW, Mercedes-Benz Group, and Porsche also posting early losses.

German Private Sector PMIs in Focus

In the morning session, Germany’s private sector PMIs will influence ECB rate cut bets and equity market sentiment. Economists forecast the HCOB Manufacturing PMI to rise from 48.4 in April to 48.9 in May, and expect the Services PMI to increase from 49. To 49.5.

Upbeat PMI surveys, including higher employment and rising prices, may temper ECB rate cut expectations, pressuring rate-sensitive DAX stocks. Conversely, softer PMIs, falling employment, and easing prices could fuel ECB rate cut bets. A more dovish ECB rate path may increase demand for risk assets.

While Ifo Business Climate data will also draw interest, these will likely play second fiddle to the PMI reports.

ECB Monetary Policy Meeting Minutes

Markets will scrutinize the ECB’s latest policy meeting minutes for signals on the future rate path. Rising support among policymakers for further rate cuts could drive the DAX higher. On the flip side, calls for caution against further rate cuts to assess trade developments may weigh on risk sentiment.

Wall Street Sell-Off Deepens Global Jitters

US equities tumbled on Wednesday, May 21, as investors reacted to a weak 20-year Treasury auction. Weak demand for US Treasuries fueled fiscal concerns and sent yields higher. The Dow slid 1.91%, while the Nasdaq Composite Index and S&P 500 dropped 1.41% and 1.61%, respectively.

In the bond markets, 10-year Treasury yields surged to 4.609%, the highest level since February, before easing to 4.597% at the close.

Commenting on the market tone, Mohamed A. El-Erian, President, Queen’s College, Cambridge University, noted:

“The uncomfortable pairing of higher US yields and a weaker dollar persists this morning, even as gold prices climb in response to ongoing geopolitical concerns.”

US Services Sector and Jobless Claims Ahead

Investors will also watch Thursday’s US economic releases. Economists forecast the S&P Global Services PMI to increase from 49 in April to 50 in May. A higher reading could ease US recession fears. However, investors should consider the employment and price trends. A higher PMI reading may have a limited impact if paired with elevated prices or weakening employment trends. Conversely, a downside surprise could intensify recession concerns.

Economists expect initial jobless claims to rise from 229k (week ending May 10) to 230k (week ending May 17). A jump toward 250k would raise fears of a US recession, while lower claims could signal a resilient labor market.

Near-Term Outlook

The DAX’s near-term trajectory hinges on upcoming PMI data, trade developments, and central bank cues.

• Bearish Scenario: A weak macro backdrop, renewed trade tensions, and hawkish signals could drag the index toward 23,500.
• Bullish Scenario: Upbeat data, dovish ECB signals, and signs of progress in US-EU trade talks may push it toward 24,500.

DAX Technical Indicators

Daily Chart

Despite the morning pullback, the DAX holds above the 50-day and 200-day Exponential Moving Averages (EMA), preserving its bullish trend.

A breakout from 24,000 could open the path toward the May 21 record high of 24,152. Sustained buying may push the index to 24,350.

On the downside, a break below 23,750 would expose the 23,500 level, with 23,000 the next support level.

The 14-day Relative Strength Index (RSI) at 68.88 indicates the DAX has room to climb to 24,152 before entering overbought conditions (RSI > 70).

Final Thoughts

Volatility may persist as investors weigh global trade dynamics, central bank signals, and macroeconomic indicators. German equities remain vulnerable to EU policy shifts and broader fiscal developments. Traders should stay attuned to both technical and fundamental drivers.