Dax Index News: Forecast Bearish as US Tariffs Fuel Flight to Safety

DAX Rallies as Germany Forms Coalition Government

German stocks rebounded sharply after Chancellor Merz secured a coalition deal, raising hopes for political stability and trade diplomacy.

EU countermeasures to US tariffs also boosted market sentiment. On April 7, European Commission President Ursula von der Leyen announced softer tariffs and excluded tariffs on US bourbon. The move raised hopes for a breakthrough in US-EU trade talks.

The DAX rallied 2.48%, partially reversing Monday’s 4.13% loss, to close at 20,280.

Banks Lead Rebound on Tariff Optimism

Optimism toward a potential transatlantic trade agreement eased recession fears, driving demand for bank stocks. Commerzbank led the gains, rallying 6.27%, while Deutsche Bank advanced 4.07%.

Despite the upbeat mood, auto stocks posted mixed results as US tariffs loomed.

BMW led losses, sliding 2.09%, with Mercedes-Benz Group and Daimler Truck Holding falling 1.49% and 0.88%, respectively. Porsche also ended the session in the red. Meanwhile, Volkswagen rose 0.51% after reporting a surge in Q1 2025 EV deliveries compared with Q1 2024.

US Markets Slide on Tariff Shock

US equity markets retreated on Tuesday, April 8, as investors digested President Trump’s new tariffs. The Nasdaq Composite Index and the S&P 500 fell 2.15% and 1.57%, respectively, while the Dow dropped 0.84%.

In bond markets, 10-year US Treasury yields climbed to a session high of 4.304% before settling at 4.291%.

Will Tariffs Derail the DAX Rally?

On Wednesday, April 9, investors will likely react to the overnight rollout of sweeping US tariffs, including a 20% levy on EU imports. Asian markets tumbled ahead of the European opening bell, reflecting concerns over recession risks and rising demand for safe-haven assets.

Trade-related headlines and central bank forward guidance are likely to be pivotal for sentiment.

• Bullish Scenario: Positive trade-related developments and central bank support for rate cuts to bolster demand for German stocks.
• Bearish Scenario: An escalation in tariff measures or central bank calls to delay rate cuts may drag the DAX lower.

Near-Term Outlook: Key Drivers

The DAX remains sensitive to developments in trade policy, inflation trends, and central bank guidance.

Potential DAX Scenarios:

• Bullish Case: Easing trade tensions, softer inflation, or dovish central bank rhetoric could push the DAX toward 21,000.
• Bearish Case: Trade negotiations, rising inflation, or hawkish central bank commentary may push the DAX toward the April 7 low of 18,490.

As of Wednesday morning, the DAX futures were down 856 points, while the Nasdaq 100 mini fell 358 points, signaling negative sentiment after the US tariff announcement.

The Kobeissi Letter reported:

“President Trump’s reciprocal tariffs have officially gone LIVE with US tariffs now in effect on 185+ countries. The US is now collecting a massive 104% tariff on Chinese goods.”

Technical Warning Signs Flash

Daily Chart:

Despite Tuesday’s bounce, the DAX trades below the 50-day and 200-day Exponential Moving Averages (EMA), indicating elevated downside risks.

• Upside Target: A break above the 200-day EMA could pave the way to 21,000. A sustained move above 21,000 may enable the bulls to target 21,500.
• Downside risk: A drop below 20,000 may open the door to a fall below the 19,675 support level. If the DAX drops below 19,675, 18,827 would be the next key support level.

With the RSI at 31.53, the DAX could drop below 20,000 before entering oversold territory (RSI below 30).

Conclusion: Monitor Macro Themes

Investors should keep an eye on trade developments, the upcoming US CPI Report, and central bank commentary. These factors will influence the DAX’s near-term price trends.

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