Dax Index News: DAX Hits Record 22K Amid Trade Hopes – Will the Rally Hold?

DAX Breaks Above 22K on Trade Talk Hopes

On Tuesday, February 11, the DAX advanced by 0.58%, following Monday’s 0.57% gain, closing at 22,038. Significantly, the DAX broke above 22,000 for the first time, striking a record high of 22,046 before easing back.

Investor optimism improved amid speculation that US President Trump’s tariff maneuvers were strategic rather than escalatory, easing fears of a US-EU trade war. Trump announced 25% tariffs on aluminum and steel imports, potentially impacting demand from European metal producers.

Investors also brushed aside the threat of reciprocal tariffs on economies imposing duties on US goods, potentially including China. Meanwhile, expectations of aggressive ECB rate cuts and attractive stock valuations, relative to US peers, remain tailwinds.

Sector Highlights: Autos Stumble Amid Demand Uncertainty

Porsche slid by 1.63% as Trump identified the auto sector as a potential target of reciprocal tariffs. BMW and Volkswagen fell 1.06% and 1.04%, respectively, while Mercedes-Benz Group also recorded a loss. Tariffs targeting automakers could make German car makers less price competitive, weighing on demand.

Germany’s Economy and US Tariff Risks

Daniel Kral, a macro specialist at Oxford Economics, underscored the potential impact of US tariffs on the German economy:

“German industry ended the year on a very weak footing. The cumulative decline from its late 2010s peak is approaching 20% (around half of that for GVA) with the weakness broad-based. Leading indicators and likely US tariffs dash hopes of a quick turnaround. Wake up call…”

Fed Chair Powell Sends Wait-and-See Signals

Fed Chair Powell delivered closely watched testimony on Capitol Hill on Tuesday, February 11. Powell reinforced the Fed’s wait-and-see approach to monetary policy, citing a robust labor market and elevated inflation.

Despite Powell’s comments pressuring US markets, the DAX remained resilient, attracting investor interest.

Wall Street Ends Mixed as Powell Downplays Near-Term Rate Cut Bets

US equity markets showed mixed sentiment on February 11 as investors weighed US tariffs and Powell’s comments. The Dow and S&P 500 gained 0.28% and 0.03%, respectively, while the Nasdaq Composite Index dropped 0.36%.

Notable movers included Apple Inc. (AAPL), which rallied 2.18% on news of a partnership with Alibaba (BABA) to advance AI capabilities for iPhone users in China.

However, crypto-related stocks declined. MicroStrategy (MSTR) and Coinbase (COIN) slid by 4.53% and 4.75%, respectively, as Bitcoin (BTC) briefly dropped below $95k, dragging the Nasdaq lower.

Key Focus: US CPI Report and Fed Outlook

On Wednesday, February 12, the US CPI Report will be crucial for the Fed and market sentiment toward the Fed rate path.

Economists expect the core inflation rate to ease from 3.2% in December to 3.1% in January. A softer core inflation reading may rekindle hopes for an H1 2025 Fed rate cut, potentially boosting risk assets. Conversely, higher-than-expected inflation may sink rate-cut bets, weighing on German stocks.

Significantly, the CPI Report precedes Powell’s second day of testimony on Capitol Hill. Traders should monitor Powell’s views on the January Report, which could be pivotal for global markets.

Beyond the inflation data, traders should watch tariff developments and FOMC members’ reactions for further monetary policy clues.

Near-Term Outlook

The DAX’s performance hinges on inflation data and central bank forward guidance.

• Softer inflation and a more dovish Fed could push the DAX toward 22,500.
• Rising inflation and a more hawkish Fed rate path may pressure rate-sensitive German stocks, potentially pulling the Index below 21,750.

Additionally, the DAX remains exposed to US trade policy. Sweeping tariffs on EU goods or an escalation in the US-China trade war could trigger a flight to safety, pressuring the DAX.

As of Wednesday morning, futures signaled a positive start to the European session.  DAX futures were up 69 points, while the Nasdaq 100 mini was flat.

DAX Technical Indicators

Daily Chart

Optimism about the US and the EU avoiding a trade war and aggressive ECB rate cuts remain crucial to key indicators. After a positive start to the week, the DAX sits well above the 50-day and 200-day Exponential Moving Averages (EMAs). The EMAs confirm bullish price trends.

A breakout above the February 11 record high of 22,046 could signal a move toward 22,150. A break above 22,150 may bring the 22,350 level into play.

Conversely, if the DAX drops below 22,000, it could allow the bears to target 21,500, a crucial support level.

With the 14-day Relative Strength Index (RSI) at 73.69, the DAX remains in overbought territory (above 70 RSI). Selling pressure could intensify at the record high of 22,046.

Conclusion: Key Drivers to Watch

Traders should focus on the US CPI Report and the Fed’s policy signals for market direction.

Additionally, tariff developments will likely influence the DAX’s trajectory.

Access our latest analysis here for a deeper dive into how global market dynamics influence the DAX.