The DAX is likely to continue its search for direction in the coming days. However, the latest signals from Fed Chairman Jerome Powell could provide a boost. Even though the US stock markets will remain closed on Thursday for the holiday, tension is likely to increase further ahead of the publication of US labor market data next Friday. Last but not least, the French election is likely to continue to cast its shadow.
DAX Chart
Source: Tradingview
Uncertainty about the outcome of the French election remains
Investors in Germany can look back on a relatively quiet start to the week.
Market participants are unlikely to be lured out of their reserves, especially ahead of the landmark French elections. The uncertainty surrounding the outcome of the second round of voting remains too great. The "Rassemblement National" party triumphed in the first round.
However, driven by dovish Powell rhetoric, the mood on the German stock market could turn positive again. According to Powell, the US is back on a "disinflationary path." However, he warned on Tuesday that the monetary authorities would need more data before a rate cut could be considered.
Investors are likely to focus in particular on some US data today, Wednesday.
ADP data and Fed minutes in focus - Wall Street remains closed on Thursday due to the holiday
At 14:15, the ADP data is usually expected to give an initial indication of the official US jobs report. According to the latest figures, an increase of 160,000 units is expected, after 152,000 jobs in May.
However, the ISM index for the non-manufacturing sector (16:00) and the FOMC minutes at 20:00 should be the main focus of attention. The Fed minutes from the most recent central bank meeting should be scrutinized for monetary policy clues.
Wall Street and the Nasdaq will remain closed on Thursday due to the Independence Day holiday. With the exception of the ECB's Monetary Accounts (13:30), there are no really relevant impulse generators on the daily agenda here in Germany either. The reports include the monetary policy meetings of the ECB Governing Council, which usually take place every six weeks.
Investors hope for a slowdown in the US labor market - unemployment rate likely to remain at 4.0 percent
Consequently, the non-farm payrolls (NFPs) are likely to decide the weal and woe on Friday (14:30). Non-farm payrolls are currently expected to show an increase of 190,000 jobs and consequently a significant decline compared to the previous month (272,000 units).
As expected, the unemployment rate could remain unchanged compared to the previous month at 4.0%.
Investors are likely to welcome a decline in the growth of average hourly wages. An increase of 0.3 percent is expected, following 0.4 percent in May.
