On Thursday, initial jobless claims increased slightly from 218k in the week ending October 25 to 221k in the week ending November 2. The modest rise supported investor expectations for a soft US economic landing.
Nevertheless, the uptick in jobless claims also bolstered expectations for a December Fed rate cut, driving buyer demand for riskier assets.
After the European closing bell, the Fed cut interest rates by 25 basis points, fueling a US equity market rally. Lower borrowing costs might improve company earnings, potentially driving stock prices higher.
Fed Chair Powell signaled more rate cuts during the FOMC press conference, contributing to the market gains.
On Thursday, November 7, US equity markets had a mixed session. The Nasdaq Composite Index and the S&P 500 saw gains of 1.51% and 0.74%, respectively, while the Dow closed flat.
Super Micro Computer (SMCI) led the Nasdaq gains, jumping 12.25%, partially reversing an 18.05% slump from the previous session.
On Friday, November 8, Michigan Consumer Sentiment Index figures require consideration. Economists predict the Index will rise from 70.5 in October to 71.0 in November. A larger-than-expected increase might temper expectations for a December Fed rate cut.
Improved consumer sentiment could fuel spending and demand-driven inflation. The Fed could delay further rate cuts to curb spending and dampen inflationary pressures. A less dovish Fed rate path could affect rate-sensitive DAX-listed stocks.
Beyond the numbers, investors should monitor FOMC member commentary. FOMC member Michelle Bowman is on the calendar to speak. Her views on Trump's policy influences on the Fed rate path could move the dial.
In the near term, DAX trends will likely hinge on tariff-related news and sentiment toward ECB and Fed rate paths. Rising bets on a more dovish ECB rate path and a December Fed rate cut could boost the DAX. However, the threat of Trump tariffs on German goods will remain a potential headwind for the DAX.
Futures suggest a positive opening for Friday's session. DAX futures were up 36 points, while the Nasdaq mini futures advanced by 2 points. Market hopes for a stimulus package from Beijing supported buyer appetite for HK and Mainland China-listed stocks, possibly setting the tone for the European session.
Investors should monitor President-elect Donald Trump-related news, central bank comments, and economic data. Stay updated with our latest news and analysis to manage risks effectively.
After Thursday's rally, the DAX hovers above the 50-day and 200-day EMAs, sending bullish price signals.
A DAX break above Thursday's high of 19,418 could signal a move to 19,500. Furthermore, a return to 19,500 could allow the bulls to target the all-time high of 19,675.
ECB chatter, US consumer sentiment figures, FOMC member speakers, and Trump policies need consideration.
Conversely, a DAX break below the 50-day EMA and 19,000 could bring the 18,750 level into play.
With the 14-day RSI at 53.38, the DAX could climb to its all-time high before signaling overbought conditions.