Top catalysts for the DAX Index: ECB decision, earnings, Iran tensions

The German DAX Index rebounded on Tuesday, rising by 1.10%, and nearing its all-time high of €25,500. It has jumped by 35% from its lowest level in April last year. This article looks at some of the key catalysts or news that will move German stocks.

DAX Index to react to ECB interest rate decision 

A key catalyst for the DAX Index is the upcoming European Central Bank (ECB) interest rate decision, which will come out on Thursday this week.

This decision will come a day after Eurostat releases the latest consumer inflation report. Economists polled by Reuters expect the upcoming report to show that the headline Consumer Price Index (CPI) dropped to 1.7% in January, much lower than the ECB target of 2.0%.

The ECB has now achieved its goal of bringing inflation to 2% while the economy is doing well. This growth has been helped by the robust spending by European economies. 

Therefore, most economists believe that the ECB will leave interest rates unchanged at 2% this year and then start hiking in the coming year. This explains why the euro and German bond yields have continued rising.

Key German earnings 

The DAX Index has done well in the past few weeks as some key German companies published strong financial results. The most notable of them was Deutsche Bank, which benefited from the strong economy and investment banking.

Infineon, a major company with a market capitalization of over $67 billion will publish its numbers on Wednesday. It will be followed by Linde and Siemens Healthineers, which are valued at over $218 billion and $56 billion, respectively.

The other key companies to watch will be those that will publish their financial results next week are Siemens Energy, Commerzbank, Siemens, Mercedes-Benz, and Deutsche Boerse. 

Commerzbank will be in focus as it releases its financial results, which are expected to be strong as other European banks have done.

Additionally, the DAX Index will react to this week’s US earnings dump by companies like Amazon and Google. Some of the other top companies that will publish their numbers this week are AMD, Merck, Eli Lilly, AbbVie, and Qualcomm.

US and Iran talks 

The other major catalyst for the DAX Index will be on geopolitics. Indeed, the index has done well this week because tensions between the United States and Iran have eased.

The two sides have started talking, which has reduced tensions between the two countries. This explains why the price of crude oil has crashed this week.

Still, a lot can change as we saw last year when Israel attacked Iran as it was talking with the United States. Therefore, deteriorating talks between the two countries will lead to elevated tensions, which will knock the DAX and other indices.

The other major catalyst for the index will be a potential interview of Kevin Warsh, who was named the Federal Reserve Chairman nominee. 

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