Dax Index News: Autos Slide as US Tariff Fears Weigh on Sentiment – Outlook Inside

DAX Starts 2025 with Cautious Optimism

The DAX Index opened 2025 on a positive note, rising to a high of 20,025 in early trading on January 2. Cautious optimism over potential ECB rate cuts and Beijing’s stimulus measures offset concerns over US tariffs and a hawkish Fed outlook.

Sector Performance: Autos Slide Amid Trump Policy Concerns

Investor jitters about US tariffs potentially targeting the EU’s auto sector weighed on auto stocks. BMW slid by 2.42% on Thursday morning, with Mercedes-Benz Group and Volkswagen seeing declines of 1.66% and 1.46%, respectively. Porsche also opened in the red.

Fears of deregulation of the US banking sector impacting the competitiveness of EU banks pressured Commerzbank and Deutsche Bank.

However, Airbus rallied 2.62%, while insurance stocks also found strong demand, contributing to the modest gains.

Chinese Data Raises Concerns, but Stimulus Hopes Persist

China’s Caixin Manufacturing PMI dipped to 50.5 in December, down from 51.5 in November. Weaker external demand, job cuts, and waning optimism weighed, impacting Hong Kong and Mainland China-listed stocks.

However, hopes for fresh stimulus measures from Beijing limited the impact on the DAX. Stimulus measures targeting consumption and domestic demand could aid German exports to China.

China’s President Xi Jinping recently reaffirmed plans for economic support, which could boost demand for China-focused German companies. However, US tariffs on Chinese goods may intensify competition in Germany’s key markets, potentially affecting demand for German exports.

Germany’s Manufacturing PMI Reflects Global Challenges

Germany’s manufacturing sector faced further scrutiny on Thursday, January 2. The HCOB Manufacturing PMI fell from 43.0 in November to 42.5 in December, unchanged from the preliminary data.

Highlights from the finalized PMI survey included:

• Sharp declines in new orders due to client caution and weak domestic and overseas demand.
• Job cuts as firms reduced backlogs amid reduced production needs.
• Input and output prices softened, reflecting subdued demand.

US Markets Close 2024 on a Weak Note

Profit-taking drove US equity markets lower on December 31, with the Nasdaq Composite Index and the S&P 500 falling 0.90% and 0.43%, respectively, while the Dow edged 0.07% lower.

Crypto-related stocks extended their losses from the previous session despite bitcoin (BTC) posting gains. MicroStrategy (MSTR) slid by 4.40%, while Marathon Holdings (MARA) declined by 3.01%, contributing to the Nasdaq’s losses.

Despite the declines, it was a bonanza year for US markets. The Nasdaq and S&P 500 rallied 29% and 23%, respectively, while the Dow gained 13% in 2024.

Focus on US Jobless Claims, the Fed, and Tariffs

In Thursday’s US session, US labor market data could influence the Fed rate path. Economists forecast initial jobless claims to increase to 224k (week ending December 28), up from 219k (week ending December 21).

A spike above 250k could retrigger investor bets on a January Fed rate cut. Lower borrowing costs could boost earnings and demand for stocks. Conversely, a drop in claims could dampen expectations for a Q1 2025 Fed rate cut. A US tighter labor market may support wage growth, fueling consumer spending and demand-driven inflation.

Additionally, US tariff developments need conidiation. Further threats of tariffs on EU goods would likely weigh on DAX-listed stocks reliant on the US. Auto and tech sector-related stocks would likely feel the impact of tariff-related chatter.

Near-Term Outlook

The DAX will hinge on US data, tariff developments, and central bank commentary. Upbeat US data, falling bets on a Q1 2025 Fed rate cut, and tariff threats may drag the DAX below 19,750. However, softer US data and silence on tariffs may drive the DAX above 20,000.

As of Thursday morning, the Nasdaq-mini futures advanced by 150 points, potentially boosting demand for German stocks.

DAX Technical Indicators

Daily Chart

Following Monday’s gains, the DAX remains above the 50-day and 200-day EMAs, affirming bullish price signals.

If the DAX breaks above the morning high of 20,025, the Index could target 20,350 next. A return to 20,350 may support a move toward the record high of 20,553.

Conversely, a DAX break below the 19,675 support level and 50-day EMA could signal a fall toward 19,500. However, buying pressure might intensify at the 19,657 support level. The 50-day EMA is confluent with it.

With the 14-day RSI at 50.03, the DAX may climb to its 20,523 record high before entering overbought territory (RSI higher than 70).

Final Thoughts

The DAX remains highly sensitive to global developments, including US economic data, tariff policies, and Chinese economic indicators. While Beijing’s stimulus and ECB rate cut hopes offer support, investors should remain cautious amid ongoing US tariff threats and a less dovish Fed outlook.

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