Dax Index News: German Producer Prices Signal Weak Demand

DAX Opens Higher as Geopolitical Tensions Simmer

The DAX Index opened higher on Thursday, February 20, rising 0.29% to 22,499. Corporate earnings and trade tariffs remained in focus after Trump threatened sweeping import duties on autos, chips, and pharmaceuticals.

Sector Performance: Autos Slide on Tariff Jitters

Infineon Technologies opened the Thursday session up 1.39%, while Siemens Energy AG and Siemens AG advanced by 1.34% and 1.23%, respectively.

Meanwhile, Airbus Group declined 1.26% despite reporting better-than-expected earnings. Full year revenue rose 6%.

Auto stocks succumbed to tariff concerns and weak earnings results. Mercedes-Benz Group opened 3.23% lower, while BMW, Porsche, and Volkswagen also dropped early in the session. Mercedes-Benz Group reported a slump in profits and a dividend cut, impacting its stock price and the broader auto sector.

German Producer Prices Signal Weakening Demand

Germany’s producer price data drew interest on Thursday, February 20. Producer prices rose 0.5% year-on-year in January after increasing 0.8% in December.

The pullback in producer prices signaled a weakening demand environment as producers lower prices when demand wanes, passing savings on to clients.

As a leading inflation indicator, softer producer price trends may suggest lower inflation, potentially influencing the ECB rate path. A more dovish ECB stance may support the DAX as lower borrowing costs could bolster corporate earnings.

While the data is important, sentiment toward US tariffs and a potential US-EU trade deal remain key drivers.

Fred Ducrozet, Head of Macroeconomic Research at Pictet Wealth Management, commented on potential curveballs to the ECB policy outlook, stating:

“Surely, the case for cutting rates well below neutral has weakened and Europe can surprise positively. But, signaling a pause before we have any sort of visibility on Ukraine, German fiscal policy and US tariffs, also looks like unnecessary risk to take.”

US Markets Recap: Key Takeaways

On Wednesday, February 19, US equity markets ended the session with gains as investors reacted to the FOMC Meeting Minutes. The S&P 500 rose 0.24%, while the Nasdaq Composite Index and the Dow posted gains of 0.07% and 0.16%, respectively.

The minutes aligned with Fed Chair Powell’s recent testimony on Capitol Hill, reinforcing a wait-and-see stance on monetary policy. The Fed’s positive view of the US economy and labor market fueled market optimism. However, concerns about the potential impact of tariffs on inflation lingered amid the increasing risk of a global trade war.

How Will US Labor Market Data Affect the DAX?

On February 20, US jobless claims and Philly Fed Manufacturing Index trends will influence risk assets.

Economists forecast initial jobless claims to rise to 215k (week ending February 15), up from 213k (week ending February 8). A spike in jobless claims could revive expectations for an H1 2025 Fed rate cut. Lower borrowing costs could boost company earnings, supporting demand for German stocks. Conversely, a fall in claims would support the Fed’s wait-and-see approach, potentially weighing on risk assets.

Meanwhile, economists expect the Philly Fed Manufacturing Index to fall to 20 in February, down from 44.3 in January. A sharp decline may challenge the Fed’s higher-for-longer rate path, boosting demand for risk assets. However, an upside surprise may dampen expectations of a near-term policy move, weighing on rate-sensitive stocks.

Beyond the data, traders should monitor tariff-related developments and Fed commentary. Further tariff threats and hawkish Fed signals could pressure the DAX.

Near-Term Outlook

The DAX’s near-term trajectory in the coming sessions hinges on Friday’s private sector PMI data.

• Stronger PMI readings, higher employment, and rising prices could lower bets on ECB and Fed rate cuts, potentially pulling the DAX toward 22,000.
• Weaker PMI data and softer inflation pressures may support more dovish central bank rate paths, pushing the DAX above 23,000.

Beyond the data, geopolitical risks and trade developments remain key drivers.

• Rising US-EU trade tensions could weigh on the DAX, while signs of a trade resolution may drive the Index to record highs.
• Progress in Ukraine peace talks and increased EU defense spending may counter potential trade tariff risks.

As of Thursday morning, US futures pointed to a choppy session, with the Nasdaq 100 mini falling 97 points.

DAX Technical Indicators

Daily Chart

Despite Wednesday’s 1.80% slide, the DAX remains well above the 50-day and 200-day Exponential Moving Averages (EMAs). However, the recent decline suggests increased volatility despite the broader bullish trend.

If the DAX breaks out from 22,500, it could move toward Wednesday’s record high of 22,935. A break above 22,935 may allow the bulls to target 23,000 next.

Conversely, a DAX fall to 22,350 could signal a fall toward 22,150. A drop below 22,350 would put the crucial 22,000 level into play.

With the 14-day Relative Strength Index (RSI) at 67.38, the DAX could return to the record high of 22,935 before entering overbought territory (RSI higher than 70).

Final Thoughts

The DAX’s outlook will depend on the upcoming private sector PMIs, central bank commentary, geopolitical risks, and tariff-related developments.

Stay ahead with our latest insights and real-time analysis here.