DAX index outlook ahead of SAP, Deutsche Bank earnings

German stocks have crawled back in the past few days as the earnings season gets underway. The DAX index rose to €12,762, which was about 7.70% above the lowest level this month. This performance mirrors that of American indices like the Dow Jones and the Nasdaq 100.

SAP, Deutsche Bank, and Daimler earnings

The DAX index will be in the spotlight this week as some of its key constituent companies release their quarterly results. These results will provide more colour about the state of the European economy.

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Deutsche Bank will publish its results on Tuesday. With interest rates rising in Europe, analysts expect that the bank’s revenues rose in the third quarter. This growth will be driven by interest income. Last week, results by leading banks like Bank of America and Goldman Sachs showed that interest income rose by more than 50% in the quarter.

However, with the volume of deal-making falling, analysts expect that its deal-making revenue slowed. Indeed, the bank is laying off dozens of staff in its investment banking division, including those in London and New York.

SAP, the second-biggest DAX index constituent after Linde, will also publish its earnings this week. Economists expect the German software giant to publish relatively weak results as corporate spending slowed. Nonetheless, the relatively weak euro will likely be a tailwind since SAP makes about 40% of its revenue in the Americas.

The other top company that will move the German DAX will be Daimler Trucks. Daimler is one of the biggest manufacturers of trucks and buses globally. It sold over 455k trucks and buses in 2021 and analysts expect that the number will increase this year.

The DAX index will also react to earnings by American companies like Microsoft, Apple, and Meta Platforms.

DAX index forecast

The daily chart shows that the German DAX has been in a recovery mode in the past few days. It has risen by about 7% from its lowest level this month and is slightly below the upper side of the descending trendline. The index is consolidating at the 25-day and 50-day moving averages while the Relative Strength Index (RSI) moved slightly above the neutral level.

Therefore, the index will likely continue rising as bulls target the key resistance point at €13,200. A drop below the support at €12,500 will invalidate the bullish view.