Dax Index News: Futures Point Up, but US Tariff Threats Cloud DAX Forecast

DAX Drops Amid Persistent Tariff Fears

Persistent tariff fears and a wavering Euro area labor market are clouding the DAX’s start to the new year, with auto and tech stocks leading a broad market decline. A weaker euro and a dovish ECB could provide the lifeline German exporters need amid rising global uncertainties.

On Friday, January 3, the DAX declined by 0.59%, reversing Thursday’s 0.58% gain to close at 19,907.

German Autos and Tech Stocks Lead Market Declines

Fears of US tariffs targeting German car manufacturers and weak demand from China weighed on auto stocks. BMW slid by 2.15%, while Mercedes-Benz and Porsche declined by 0.81% and 0.77%, respectively. The new year began on a sour note for automakers, as concerns over US trade policies lingered.

Tech stocks also struggled, with SAP and Infineon Technologies reported losses of 1.55% and 1.27%, respectively.

German Labor Market Shows Signs of Strain

German unemployment increased by 10k in December, following a 7k rise in November. The modest increase left Germany’s unemployment rate unchanged at 6.1%.

Concerns about a weakening Euro Area labor market have fueled expectations for multiple ECB rate cuts. A dovish ECB could weigh on the EUR, potentially offsetting the impact of US tariffs by boosting the competitiveness of German exports.

Germany’s Services Sector in Focus

On Monday, January 6, Germany’s HCOB Services PMI requires consideration. According to the preliminary survey, the Services PMI increased from 49.3 in November to 51.0 in December.

An upward revision could temper expectations for aggressive ECB monetary policy easing to support the economy. A less dovish ECB rate path could leave borrowing costs elevated, affecting rate-sensitive stocks.

Dr. Cyrus de la Rubia commented on the preliminary data, stating:

“It is still a bit unclear whether the services sector is in a slow-motion downturn or on the brink of stabilization leading to recovery. Services employment has been cautiously cut since July, and new business has been shrinking slowly since September.”

Dr. Cyrus de la Rubia concluded:

“If this trend continues, a recession in this sector seems likely. However, with real wages rising, people’s spending power has increased, which should boost consumption and is especially good for the services sector.”

US Economic Data Impacts DAX Sentiment

The US ISM Manufacturing PMI increased to 49.3 in December, up from 48.4 in November. New orders rose for the second month, signaling improving demand. Prices also moved higher while manufacturers reduced headcounts.

December’s data indicated a steadying in the manufacturing sector. A return to expansion, rising above the neutral 50 level, would marry with robust service sector activity, supporting a less dovish Fed rate path. A less dovish Fed rate path could weigh on earnings for rate-sensitive companies.

US Markets Rally on Economic Optimism

US equity markets ended Friday, January 3, on a high. The Nasdaq Composite Index and the S&P 500 advanced by 1.77% and 1.26%, respectively, while the Dow gained 0.80%. Significantly, the Nasdaq and S&P 500 ended five-day losing streaks as dip buyers returned.

Nevertheless, market concerns about Trump’s policies driving inflation and a more hawkish Fed rate path remain headwinds.

US Services in Focus

In Monday’s US session, the services sector will be in focus. According to the preliminary report, the S&P Global Services PMI rose from 56.1 in November to 58.5 in December. An upward revision may dampen bets on a Q1 Fed rate cut, potentially weighing on DAX-listed stocks. Conversely, a sharp downward revision could retrigger expectations for a Q1 Fed rate cut.

Investors should also consider the sub-components, including employment and price trends. Rising employment and prices would align with the more hawkish FOMC Economic Projections.

Near-Term Outlook

The DAX will depend on the Services PMI data and central bank commentary. Better-than-expected PMI data and hawkish central bank chatter could drag the DAX toward the 50-day EMA and 19,675 support level. Softer PMIs, however, may drive the DAX toward its record high of 20,523.

Meanwhile, US tariff developments remain a key factor influencing market sentiment.

As of Monday morning, futures pointed to a positive session. DAX futures were up 65 points, while the Nasdaq-mini futures gained 7 points.

DAX Technical Indicators

Daily Chart

Despite Friday’s losses, the DAX sits above the 50-day and 200-day EMAs, affirming bullish price signals.

If the DAX returns to 20,000, the 20,350 level would be the next target. A breakout from 20,350 could enable the bulls to target the record high of 20,523.

US tariff-related chatter, services sector PMIs, and central bank commentary will influence DAX trends.

Conversely, a DAX break below 19,750 could signal a fall toward the 50-day EMA and the 19,675 support level. However, buying pressure may increase at the 19,657 support level. The 50-day EMA is confluent with it.

With the 14-day RSI at 49.64, the DAX could drop below the 19,675 support level before entering oversold territory (RSI lower than 30).

Final Thoughts

The DAX’s trajectory depends on economic data, central bank decisions, and geopolitical developments. While global uncertainties linger, a weaker EUR and dovish ECB rate path could mitigate external pressures and support German exporters.

Read our detailed analysis of how global market dynamics influence the DAX’s performance here.