The DAX index was 0.5% higher on Tuesday after two economic releases from Germany were higher than analyst expectations.
The first release was German Gross Domestic Product, which actually showed a record drop in the German economic output for the second quarter, but this was due to the effects of the virus lockdowns. The plunge in output was similar to that seen in other developed economies and the number was slightly better than the -10.1% contraction that analysts had forecast.
The GDP number was followed by the IFO Business Climate Index, which is a survey of German business owners, and the index came in at 92.6, which was higher than the 92.2 expected. The beat was the fourth-straight rise in the index and highlights that German entrepreneurs are confident that the business climate will improve over the next six months.
The next release for the German economy will be Friday’s GfK Consumer Confidence release and the DAX index will move to tracking U.S. indices over the next couple of days as traders digest statements from the Federal Reserve’s Jackson Hole meeting of economic policymakers. There are also U.S. economic releases in the form of durable goods orders tomorrow and GDP on Thursday.
Dax Index Technical Outlook
The DAX index gapped higher this morning from under 12800 to trade above 12900 and the data releases have seen the index trade at 13200. The next target on the upside for the Dax is the 13315 high from the 21st July and traders will be waiting for the U.S. markets to open for another boost of liquidity. If the Dax were to retreat then a break of 13000 will target the gap mentioned between 12800-12900, while there is plenty of support below that with an uptrend line at 12700 and a cluster of support near 12500.