DAX Defies Inflation Fears as Earnings and Technicals Take Center Stage

Germany's DAX holds above 24,000 points as corporate results and bullish charts outweigh inflation fears. Tech stocks like Aixtron surge, while Deutsche Telekom lags.

The German benchmark index is demonstrating unexpected resilience, clinging to gains above the 24,000-point threshold despite a backdrop of rising inflation. This strength is being fueled by a pivot in market focus, shifting from geopolitical headlines to the concrete results of the corporate earnings season and a supportive technical picture.

On Friday, the DAX traded firmly in positive territory. It was quoted around 24,270 points in the early afternoon, a gain of approximately 0.7% from the previous close. The initial driver was geopolitical, with hopes for a diplomatic solution in the Middle East providing a lift. However, the market's momentum is increasingly being dictated by company fundamentals. The quarterly reporting period has become the primary catalyst, offering tangible data beyond macro fears.

Corporate news is delivering a mixed but active narrative. In the technology sector, Aixtron shares surged by more than 20%. Analysts at Citi pointed to a strong order intake in optoelectronics, which more than compensated for a weak first quarter, prompting the company to raise its full-year revenue guidance. SAP also benefited from the positive sector sentiment, posting a moderate gain.

Not all news was positive. Deutsche Telekom faced significant pressure, its stock recording the index's largest daily loss with a drop of around six percent. The market is grappling with growth concerns in the company's US business ahead of its Q1 report on May 13th. In a separate development, the telecoms giant, in partnership with Starlink, launched a new Satellite Internet Access service aimed at remote regions. The banking sector also came under pressure following Goldman Sachs' results, which highlighted how the Middle East conflict is dampening investment appetite and M&A activity.

From a chart perspective, the DAX has staged a notable recovery from its multi-month low in late March. A series of higher lows established on March 30th, April 2nd, and April 13th sketch a clear upward trend structure. Key moving averages have issued buy signals, and the Bollinger Bands are widening. The immediate technical battle is at the 200-day line. While the index breached this level intraday on Wednesday, it failed to close above it. A sustained breakout above the resistance at 24,363 points is needed to open a path toward 24,892. On the downside, initial support lies at 23,759 points.

Macroeconomic data presents a persistent headwind. Germany's inflation rate climbed to 2.7% in March, its highest level in two years, driven predominantly by soaring energy costs. This structural issue is expected to feature prominently in upcoming industrial earnings reports. In response, the European Central Bank maintained its deposit facility rate at 2.0% for the sixth consecutive time. The conflict in Iran has shifted its forecasts, with the ECB now projecting 2026 inflation at 2.6% alongside meager growth of just 0.9%. The central bank has avoided committing to a specific rate-cut path, and markets are now pricing in the possibility of one or two rate hikes by year-end. The next ECB meeting on April 30th could further shape these expectations.

Historically, seasonal trends favor the DAX. Over the past decade, the index has consistently gained between April 10th and June 7th, delivering an average return of over six percent. Whether this pattern holds now depends less on the calendar and more on the substance of the ongoing earnings season and the signals from the ECB later this month. For now, the 24,000-point level remains the pivotal axis for the trading week ahead.