Early in the European session, Eurozone employment and industrial production figures will draw interest. Economists expect employment to rise 0.1% quarter-on-quarter in Q2 after a 0.2% increase in Q1.
Weaker-than-expected numbers could signal a pullback in consumer spending, dampening inflation. A softer inflation outlook would support a more dovish ECB rate path, lifting demand for risk assets. On the other hand, a higher reading may temper bets on an ECB rate cut.
Economists forecast industrial production to fall 1% month-on-month in June after rising 1.7% in May. A sharper fall in production would reflect the impact of tariffs on demand, pressuring industrial-linked stocks. Conversely, an unexpected rise in production may send the DAX higher.
Beyond the data, trade developments, Russia-Ukraine war-related news, and corporate earnings will influence DAX trends ahead of the US opening bell.
Wall Street Extends Gains as Fed Rate Cut Bets Soar
US markets posted gains on Wednesday, August 13, as investors locked in bets on a September Fed rate cut. The Dow climbed 1.04%, while the Nasdaq Composite Index and the S&P 500 advanced 0.14% and 0.32%, respectively.
US Treasury Secretary Scott Bessent fueled expectations of multiple Fed rate cuts, stating:
“I think we could go into a series of rate cuts here, starting with a 50-basis point rate cut in September. If you look at any model it suggests that we should probably be 150, 175 basis points lower.”
According to the CME FedWatch Tool, the probability of a September Fed rate cut rose from 93.9% on August 12 to 100% on August 13. Notably, there was a 6.2% chance of a 50-basis-point rate cut, up from 0% the previous day.
Markets Brace for Crucial US Producer Prices and Labor Market Data
Later in the Thursday session, US producer prices and jobless claims data will influence risk sentiment.
Economists forecast producer prices to rise 2.5% year-on-year in July, up from 2.3% in June. A higher reading may signal a less dovish Fed policy stance. Producers adjust prices based on demand. Rising demand could lead to price hikes, passing higher prices on to consumers. A higher inflation outlook may weigh on risk assets such as the DAX.
Conversely, a softer reading could bolster expectations of aggressive Fed rate cuts, lifting sentiment.
Economists forecast initial jobless claims to rise from 226k (week ending August 2) to 228k (week ending August 9). A modest increase could support further policy easing. However, a spike above 250k may revive stagflation fears, potentially weighing on sentiment.