Dax Index News: Forecast Hinges on Tariff Moves, Ifo Expectations in Focus

DAX Opens Lower as Focus Returns to US Tariff Developments

It could be another testy session for the DAX, which faces a potential four-day losing streak. President Trump reignited concerns over auto tariffs, threatening the competitiveness of German manufacturers in the US market. Recent tit-for-tat measures between the US and EU also risk exposing a broader range of German goods to levies.

On March 24, Trump floated the possibility of tariff breaks for certain countries and hinted at more sector-specific reciprocal tariffs, potentially taking effect on April 2.

On Tuesday, March 25, the DAX Index opened higher, up 0.19% to 22,895.

Sector Performance: Auto Stocks Decline, Tech Stocks Advance

Hopes of easing tariff risks boosted buyer demand for German-listed auto stocks. BMW led the charge, rallying 1.32%. Volkswagen, Mercedes-Benz Group, and Porsche also trended higher.

Meanwhile, healthcare stocks also made early gains, with Fresenius Medical Care advancing 1.20%. Autos, pharmaceuticals, and semiconductors had been US target for tariffs ahead of Trump’s latest shift in tariff plans.

German Business Sentiment in Focus

Economists expect Germany’s Ifo Business Climate Index to rise from 85.2 in February to 86.8 in March. An upswing in business sentiment could signal higher investment and job creation, supporting Germany’s economic recovery.

Beyond the headline Index, investors should consider the Expectations subindex, a key gauge of forward-looking sentiment. The Expectations subindex climbed from 84.3 to 85.4 in February, but remained well below April 2024’s high of 89.3.

Expert Views on the German Economy and Outlook

Daniel Kral, Europe macro specialist at Oxford Economics, commented on Monday’s PMI numbers for the Eurozone, stating:

“Small improvement in Eurozone flash PMIs in March but the deceleration in services (75% of the economy) is worrying. Improvement in manufacturing continued (too soon for Germany’s fiscal coming of age to have an impact) but as they say, the proof is in the pudding (hard numbers).”

Germany’s HCOB Services PMI dropped from 51.1 in February to 50.2 in March, while the Eurozone’s PMI fell from 50.6 to 50.4.

US Market Recap: Tariff Shifts Bolster Risk Sentiment

US equity markets rallied on Monday, March 24, as investors responded to President Trump’s latest tariff comments. By suggesting sector-specific tariffs and exemptions for selected countries, he alleviated concerns over broader economic fallout.

The Nasdaq Composite Index soared 2.27%, while the Dow and the S&P 500 gained 1.42% and 1.76%, respectively.

Stronger-than-expected US economic data contributed to the positive start to the week. The S&P Global Services PMI increased from 51.0 in February to 53.2 in March. Contributing about 80% to US GDP, the pickup in services sector activity eased fears of a recession, boosting risk sentiment.

US Consumer Confidence in the Spotlight

Markets now turn to the March CB Consumer Confidence Index. Economists forecast a decline from 98.3 in February to 94.0 in March. A reading below 90 could revive recession fears and strengthen expectations of multiple 2025 Fed rate cuts.

Waning consumer confidence would likely curb consumer spending, which accounts for over 60% of US GDP. While lower spending could dampen demand-driven inflation, recession fears could overshadow the effects of a more dovish Fed rate path on markets.

Conversely, an upswing in consumer confidence could signal economic resilience, potentially reducing Fed rate cut bets. In this scenario, the DAX could also face increased selling pressure.

Other stats include housing sector numbers. However, these will likely play second fiddle to the consumer confidence data.

Beyond economic data, traders should continue monitoring evolving tariff developments, which continue influencing global risk sentiment.

Near-Term Outlook

The DAX’s trajectory will hinge on central bank policies, economic data, and tariff developments:

• Bearish Scenario: Rising US-EU trade tensions, weaker economic data, and hawkish central bank rhetoric could push the DAX toward 22,500.
• Bullish Scenario: Dovish central bank chatter, easing trade tensions, and upbeat economic data could drive the DAX toward its record high of 23,476.

As of Tuesday morning, US futures pointed to a choppy US session, with the Nasdaq 100 mini down 35 points.

DAX Technical Indicators

Daily Chart

Despite a three-day losing streak, the DAX remains well above the 50-day and 200-day Exponential Moving Averages (EMAs), signaling strong bullish momentum. However, economic data and tariff-driven volatility raise short-term downside risks.

If the DAX breaks out above 23,000, the bulls could target the record high of 23,476. A move to 23,476 may bring 23,750 into sight.

Conversely, a DAX fall to 22,750 could signal a drop toward 22,500. A break below 22,500 would bring the 50-day EMA into play.

The 14-day Relative Strength Index (RSI) at 53.71 suggests the DAX could return to the March 6 record high of 23,476 before entering overbought territory (RSI > 70).

Final Thoughts

Key market forces influencing the DAX outlook include:

• US-EU trade relations and potential tariff escalations.
• ECB and Fed policy direction and rate guidance.
• German business sentiment.
• US consumer confidence trends.

With elevated market volatility, traders should closely monitor policy shifts and technical signals for trading opportunities. View our latest reports here.