Dax Index News: Inflation Data, US Tariffs, and ECB Policy in Focus

DAX Slides Amid Fears of US Tariffs Hitting EU Carmakers

US President Trump’s renewed tariff threats sent markets into risk-off mode, triggering a flight to safety. On Thursday, February 27, Trump reiterated plans to impose tariffs on China, Canada, and Mexico, reinforcing his willingness to act on trade threats.

The DAX slid by 1.07% on Thursday, February 27, partially reversing Wednesday’s 1.71% rally to close at 22,551.

Sector Highlights: Autos Stumble as Tariffs Loom

Auto stocks stumbled as investors priced in the potential fallout from US tariffs targeting Germany’s car manufacturers. BMW and Porsche plunged 3.80% and 3.62%, respectively. Mercedes-Benz Group and Volkswagen also posted heavy losses.

German tech stocks SAP and Infineon Technologies declined by 2.21% and 2.80%, respectively, pressured by Nvidia’s (NVDA) 8.48% plunge after the chipmaker’s weaker-than-expected gross margin projections overshadowed its positive revenue outlook.

ECB Monetary Policy Meeting Minutes Reinforce Rate Cut Bets

On February 27, the ECB Monetary Policy Meeting Minutes raised expectations of multiple rate cuts, providing brief support. While policymakers acknowledged the need for caution, they saw disinflation well on track, with ECB staff projecting headline inflation of 2.1% in 2025 and 1.9% in 2026.

Frederik Ducrozet, Head of Macroeconomic Research at Pictet Wealth Management, remarked:

“A higher neutral rate implied that rates would plausibly be getting close to neutral rate territory. This meant that the point was approaching where monetary policy might no longer be characterised as restrictive.”

A higher neutral rate and fewer rate cuts could impact borrowing costs and company earnings, weighing on rate-sensitive stocks.

Despite this, markets expect an ECB rate cut next week, with a Reuters poll showing all 82 economists predicting a rate cut to 2.5%.

German Economic Data to Spotlight the ECB

On Friday, February 28, investors will scrutinize German economic data, particularly inflation figures, to assess the ECB’s policy outlook. Economists expect retail sales to rise 1.5% year-on-year in January, down from 1.8% in December, while forecasting the unemployment rate to hold at 6.2% in February.

Weaker retail sales and higher unemployment could reinforce expectations for a more dovish ECB, but inflation data will be key. Economists expect Germany’s annual inflation rate to remain at 2.3% in February. A lower inflation reading could cement a March rate cut and signal further easing. Conversely, higher inflation may temper bets on multiple ECB rate cuts.

For the DAX, a more dovish ECB rate path may lower borrowing costs, boosting company earnings, while higher borrowing costs could impact rate-sensitive stocks.

US Economic Data Sends Mixed Signals

Meanwhile, US labor market numbers, GDP data, and durable goods orders fueled uncertainty about the Fed rate path.

• Initial jobless claims jumped from 220k (week ending February 15) to 242k (week ending February 22), raising concerns about the labor market.
• US GDP growth slowed to 2.3% quarter-on-quarter in Q4 2024, down from 3.1% in the previous quarter.
• Durable goods orders surged by 3.1% in January, reversing a 1.8% drop in December.

Slower growth and a softer labor market fueled concerns about the US economy, pressuring the DAX.

US Markets Tumble on Nvidia Forward Guidance and US Tariffs

US equity markets faced heavy selling pressure on Thursday, February 27. Investors reacted to Nvidia’s earnings report and Trump’s tariff announcements, which raised concerns about global trade tensions.

• Trump reiterated plans for 25% tariffs on Canadian and Mexican imports and 10% levies on Chinese goods, effective March 4. Trump previously stated these tariffs would become effective on April 2.
• EU faces potential 25% tariffs on exports to the US.
• Trump has also threatened sweeping tariffs on autos, semiconductor chips, and pharmaceuticals.
• Nvidia’s weaker-than-expected gross margin forecast triggered an 8.48% decline, dragging semiconductor stocks lower.

The Nasdaq Composite Index slid by 2.78%, while the S&P 500 declined by 1.59%. The Dow dropped by 0.45%.

Key Economic Data Ahead: US Inflation in Focus

On February 28, markets must consider the US Personal Income and Outlays Report. Economists forecast the Core PCE Price Index to increase by 2.6% year-on-year in January, down from 2.8% in December.

A softer inflation reading could fuel bets on an H1 2025 Fed rate cut, potentially boosting risk assets. However, persistent inflation could dampen expectations of a near-term Fed rate cut, pressuring rate-sensitive stocks.

While inflation will be crucial, investors should also consider personal income and spending trends. Weaker readings could signal a softer inflation outlook, supporting a more dovish Fed rate path, while upward trends in personal income/spending may fuel inflation fears.

Beyond the data, Fed speakers and US tariff developments remain key drivers for sentiment. Increased EU-US tensions could overshadow the effects of softer economic data.

Near-Term Outlook

The DAX’s near-term direction hinges on:

• German fiscal policy: Progress on a defense fund and stimulus measures could support the Index.
• US-EU and US-China tariff risks – Escalating trade tensions may pressure global equities.
• Inflation – German and US inflation figures could dictate near-term ECB and Fed rate paths.

Progress toward a sizeable defense fund, easing tariff risks, and more dovish central bank guidance could drive the DAX toward 22,750.

However, resistance to loosening Germany’s debt break, rising trade war risks, and hawkish central bank policy stances may drag the Index toward 22,000.

As of Friday morning, the DAX mini was down 138 points, while the Nasdaq 100 mini gained 11 points, signaling a choppy session ahead.

DAX Technical Indicators

Daily Chart:

Despite Thursday’s pullback, the DAX remains well above the 50-day and 200-day Exponential Moving Averages (EMAs). However, rising volatility suggests potential short-term downside risks within the broader uptrend.

A breakout from 22,500 could signal a move toward 22,750. A break above 22,750 may enable the bulls to target the February 19 record high of 22,935 next.

Conversely, if the DAX breaks below 22,500, 22,150 and the 50-day EMA will be the next key support levels.

With the RSI at 62.97, the DAX remains below overbought levels (above 70), potentially allowing a move toward the 22,935 high.

Conclusion: Key Drivers to Watch

Traders should closely monitor:

• German fiscal policy updates.
• US inflation data from Germany and the US.
• ECB and Fed commentary.
• US-EU and US-China trade tensions.

Further detailed analysis of global market influences on the DAX is available here.