Dax Index News: Hawkish Fed, Tariff Threats Keep DAX Volatile – Analysis Today

DAX Faces Seven-Day Losing Streak – How Will the DAX React to US Consumer Confidence?

The DAX’s six-day retreat underscores investor unease, fueled by a hawkish Fed and US tariff threats.

On Friday, December 20, the DAX declined by 0.43%, following Thursday’s 1.35% slide to close at 19,885. The DAX dropped to 19,650 before rebounding on US inflation data.

Sector Performance: Finance and Tech Under Pressure

US President-elect Donald Trump spooked investors, threatening tariffs if the EU did not acquire US oil and gas to narrow the deficit between the two economies. The tariff threat followed Wednesday’s FOMC economic projections that signaled fewer rate cuts in 2025.

Commerzbank and Deutsche Bank led the declines, sliding by 2.12% and 2.05%, respectively. Reinsurers Munich Re and Hanover Re also ended the session with heavy losses.

However, auto stocks capped the losses despite Trump’s tariff threats. Volkswagen rallied 1.69% on reports of an agreement to avoid German factory closures, potentially eliminating production disruption threats. BMW and Porsche also posted gains.

German Producer Prices Offer Glimmer of Hope

Germany’s producer prices increased by 0.1% year-on-year in November after falling 1.1% in October. Producer prices saw a year-on-year increase for the first time since June 2023, suggesting improving demand. Producers increase prices if competition builds, passing costs onto consumers.

While returning to positive territory, the November data will unlikely impact the ECB rate path in the near term.

Wage Growth Data Support ECB Rate Cut Bets

Meanwhile, Eurozone wage growth data boosted bets on ECB rate cuts. Pictet Wealth Management Head of Macroeconomic Research Frederik Ducrozet shared wage tracker data, saying,

“Early Christmas present from the ECB, which started to release their wage tracker accounting for agreements between trade unions and employers in seven countries (available every six weeks following ECB meetings). The tracker points to more easing ahead.”

Ducrozet stated that the data indicates negotiated wages will climb between 1.5% (including one-offs) and 3.0% (excluding one-offs) in 2025, down from 5.4% in Q3 2024.

Softer wage growth could dampen demand-driven inflation, supporting a more dovish ECB rate path.

US Inflation Fuels a Late DAX Recovery

The US Personal Income and Outlays Report showed that the US Core PCE Price Index rose 2.8% year-on-year in November, mirroring October’s trend. The increase was softer than a consensus 2.9% increase, fueling demand for DAX-listed stocks.

However, the data failed to offset the impact of US tariff threats.

US Markets Rally on US Inflation Data

On Friday, US equity markets ended the week on a high note. The Nasdaq Composite Index and the S&P 500 recovered from Thursday’s pullback, gaining 1.03% and 1.09%, respectively. The Dow rose by 1.18%.

In the bond markets, 10-year US Treasury yields further boosted demand for riskier assets, falling for just the second time in ten sessions.

How Will US Consumer Confidence Impact the DAX?

In Monday’s US session, the CB Consumer Confidence Index could influence the Fed rate path and risk sentiment. Economists expect the Index to rise from 111.7 in November to 113.0 in December. Rising consumer confidence could signal a pickup in spending, fueling demand-driven inflation. A higher inflation outlook may support fewer 2025 Fed rate cuts.

Rising borrowing costs may weigh on company earnings and stock prices.

Near-Term Outlook

The DAX’s near-term trends hinge on US data, central bank chatter, and US tariff developments. Hotter-than-expected US data could lower expectations of Fed rate cuts, potentially pulling the DAX below 19,650. Conversely, weaker data and central bank support for near-term rate cuts could drive the DAX back toward 20,000.

Beyond the data, US tariff-related developments remain a key risk factor.

As of Monday morning, futures pointed to a mixed session. DAX futures were down 15 points, while the Nasdaq-mini futures advanced by 139 points.

DAX Technical Indicators

Daily Chart

Despite a six-day losing streak, the DAX sits above the 50-day and 200-day EMAs, sending bullish price signals.

If the DAX returns to 20,000, it could signal a move toward 20,350 next. A break above 20,350 could signal a move toward the December 13 record high of 20,553.

US tariff-related chatter, US economic data, and central bank commentary will influence DAX trends.

Conversely, a DAX drop below the 19,675 support level and 50-day EMA could enable the bears to target 19,500. However, buying pressure could increase at the 19,657 support level. The 50-day EMA is confluent with it.

With the 14-day RSI at 49.21, the DAX could fall below 19,500 before entering oversold territory (RSI less than 30).

Final Thoughts

The DAX remains exposed to global drivers, including US economic data, US tariff concerns, and central bank forward guidance. Investors should expect further volatility following the Fed’s cut-and-hold maneuver. US tariffs on German goods may impact company earnings and the DAX. US tariffs may directly impact German auto manufacturers.

Furthermore, US tariffs on China could increase competition, further affecting demand for German goods.

Explore in-depth forecasts and actionable strategies here for navigating DAX volatility.