The DAX declined for a third consecutive session on Friday, March 28, falling 0.96% to 22,462. US tariff concerns pressured German exporters, with reciprocal US tariffs possibly effective from April 2.
The Kobeissi Letter reported on the latest tariff developments, stating:
“BREAKING: President Trump says he will be announcing new pharmaceutical tariffs soon.”
US inflation data added to the risk-off mood, with February figures fueling stagflation concerns.
Auto stocks slid as Trump’s 25% tariff on car imports loomed. Continental fell 2.60%, while Volkswagen, Porsche, Mercedes-Benz Group, and Daimler Truck Holding also closed lower.
Tech shares followed suit, with Infineon Technologies sliding 4.04%.
Beyond tariffs, economic indicators highlighted domestic weakness. The unemployment rate rose unexpectedly from 6.2% in February to 6.3% in March.
Consumer sentiment remained fragile despite a marginal improvement. The GfK Consumer Confidence edged up to -24.5 for April (March: -24.6). The willingness to save indicator rose to its highest level since April 2024, reflecting consumer caution.
Rolf Burkl of the Nuremberg Institute noted:
“The high willingness to save can still be seen as an expression of considerable uncertainty among consumers. A fast formation of a government and the early adoption of a budget for this year would be an important factor for more planning security – not only for companies, but also for private households. Because then they would be more willing to spend money again and stimulate consumption.”
After Friday’s data, Germany’s inflation numbers could give more insights into the demand environment. Economists expect the annual inflation rate to hold at 2.3% in March.
Hotter-than-expected inflation figures could signal a less dovish ECB rate path, impacting rate-sensitive stocks. Conversely, a softer inflation print may boost demand for German-listed stocks.
Retail sales figures are also due, though inflation will likely dominate investor focus unless retail sales figures deliver a significant surprise.
On March 28, US data triggered fears of a hawkish Fed stance. The Core PCE Price Index rose 2.8% year-on-year in February, up from 2.7% in January. Softer personal spending fueled stagflation fears.
The Michigan Inflation Expectations Index further rattled markets, surging from 4.3% in February to 5.0% in March, dampening hopes for an improved consumer outlook.
Hot inflation, tariffs, and hawkish Fed fears hit US markets. The Nasdaq Composite Index tumbled 2.7% on March 28, while the Dow and the S&P 500 slid by 1.69% and 1.97%, respectively.
Looking ahead to Monday, March 31, the focus turns to the Chicago PMI and Dallas Fed Manufacturing PMI. Softer readings could signal weakening demand, potentially reigniting recession fears. Conversely, stronger prints could reinforce bets on a more hawkish Fed stance.
Traders should also track tariff-related updates and FOMC members’ views on inflation and monetary policy.
The DAX’s direction will depend on several key drivers: German inflation, tariff developments, and central bank commentary.
Potential DAX Scenarios:
As of Monday morning, the DAX futures were down 135 points, while the Nasdaq 100 mini dropped 263 points, pointing to a choppy session.
Despite recent losses, the DAX remains above the 50-day and 200-day Exponential Moving Averages (EMAs), maintaining a bullish bias. However, tariff volatility presents a short-term risk.
With the RSI at 46.39, the DAX remains above oversold levels (below 30), leaving room for a drop to 22,000.
Investors should focus on Germany’s inflation data, ongoing US-EU and US-China trade tensions, and central bank commentary. These factors will influence market direction in the coming sessions.
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With over 28 years of experience in the financial industry, Bob has worked with various global rating agencies and multinational banks. Currently he is covering currencies, commodities, alternative asset classes and global equities, focusing mostly on European and Asian markets.