DAX Index News: Market Awaits ECB Policy Insights Amid Tariff Fears – Forecast Today

DAX Tumbles on Tariff Woes

The DAX Index opened lower on Thursday, February 27, falling 0.89% to 22,591, as investor sentiment soured following renewed US tariff threats.

US President Trump’s plans to impose 25% tariffs on EU imports weighed on market confidence. According to The Kobeissi Letter:

“At around 12:30 PM ET, President Trump began answering questions about tariffs. He said tariffs will be announced very soon and that the EU was formed to screw the US. He mentioned that the tariffs would be applied generally and specifically called out car imports.”

During a cabinet meeting, Trump said:

“We have made a decision and we’ll be announcing it very soon. It’ll be 25%.”

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero reacted sharply:

“Trump is imposing 25 % tariffs on European cars and other items. This comes after siding with China at the UN and against #Ukraine and European allies. Trump has killed the Transatlantic Alliance is only 5 weeks after taking office. Imagine what he can do in 2-4 years (if not more). Nothing left of the current global order which the US created. History will not be kind with Trump. I guess he does not care.”

Sector Performance: Auto Stocks Under Pressure

Auto stocks were among the worst performers going into Thursday’s session. Volkswagen opened 2.52% lower, with BMW, Mercedes-Benz Group, and Porsche also posting heavy losses. President Trump’s focus on EU autos weighed on buyer demand.

US tariffs could raise prices for German autos, making them less competitive in the US market. Under this scenario, automakers could potentially face weaker demand and softer earnings.

Eurozone Economic Sentiment and the ECB Policy in Focus

On February 27, traders should consider the Eurozone’s Economic Sentiment Index, expected to rise from 95.2 in January to 96.0 in February.

A higher-than-expected reading could signal a pickup in consumer spending, potentially bolstering the Eurozone economy. Consumer spending may also fuel demand-driven inflation, tempering expectations for multiple ECB rate cuts.

Conversely, an unexpected drop in sentiment would support aggressive rate cuts to counter economic uncertainty.

Later in Thursday’s session, the ECB’s Monetary Policy Meeting Minutes will give insights into the ECB’s policy outlook. Support for multiple rate cuts could boost demand for German stocks, especially amid concerns over Trump’s latest tariff threat and its impact on the Eurozone economy.

Policy support to counter the potential impact of tariffs could bolster demand for German-listed stocks.

US Markets Recap: Tariff Fears and Economic Uncertainty

On Wednesday, February 26, US equity markets saw mixed performance as investors reacted to Trump’s tariff updates. Alongside the EU tariff threats, Trump affirmed that new tariffs on Canada and Mexico would take effect on April 2 instead of March 4.

The Nasdaq Composite Index and the S&P 500 advanced 0.26% and 0.01%, respectively, while the Dow dropped by 0.43%.

After the closing bell, Nvidia beat earnings expectations and issued an upbeat outlook, boosting investor sentiment.

US Economic Indicators: Key Drivers for Market Sentiment

On February 27, US economic indicators could influence risk sentiment and Fed rate cut expectations.

• Lower jobless claims and jump in durable goods orders could lower expectations for an H1 2025 Fed rate cut. A more hawkish Fed rate path could pressure risk assets as higher rates may impact corporate earnings.
• Weaker jobless claims and durable goods orders data may raise concerns about the US economy. Rising bets on an H1 2025 Fed move could boost demand for DAX-listed stocks.

Beyond the data, traders should also track FOMC members’ commentary and tariff-related news as further tariff threats or hawkish Fed signals could weigh on the DAX.

Near-Term Outlook

The DAX’s near-term trajectory will depend on US inflation data on February 28 and central bank commentary:

• Rising inflation and hawkish central bank forward guidance may drag the DAX toward 22,000.
• Softer inflation may signal more dovish central bank stances, driving the DAX toward 23,000.

Additionally, geopolitical risks and trade developments will be critical:

• An EU retaliation to Trump’s tariff threats could escalate into a full-blown US-EU trade war, negatively impacting risk assets.
• Signs of negotiation could support risk sentiment.

Additionally, Germany’s fiscal policy will play a key role in influencing investor confidence.

As of Thursday morning, US futures pointed to a mixed session, with the Nasdaq 100 mini up 39 points.

DAX Technical Indicators

Daily Chart

After Wednesday’s rally, the DAX sits well above the 50-day and 200-day Exponential Moving Averages (EMAs). However, the recent fall through 22,500 signals increased volatility despite the broader bullish trend.

If the DAX returns to the record high of 22,935, it could signal a move through 23,000 next. A break above 23,000 may enable the bulls to target 23,500.

Conversely, a DAX drop below 22,500 could bring 22,350 into play. A fall through 22,350 would enable the bears to target 22,000.

With the 14-day Relative Strength Index (RSI) at 64.07, the DAX may climb to the record high of 22,935 before entering overbought territory (RSI higher than 70).

Final Thoughts

With global trade tensions, central bank policies, and US economic data influencing the DAX’s outlook, staying ahead of market shifts is crucial. Traders should closely monitor tariff developments, rate expectations, and technical indicators here to navigate volatility and trading opportunities.