Dax Index News: Markets Eye Powell’s Testimony as Tariff Risks Loom

DAX Opens Lower as Tariffs Loom

The DAX Index opened lower on Tuesday, February 11, falling 0.05% to 21,900.

Economic uncertainty intensified as the US rolled out 25% tariffs on aluminum and steel imports. While Germany is a key steel supplier, ThyssenKrupp argued that US domestic production meets most demand, downplaying the impact of tariffs.

Nevertheless, German Chancellor Olaf Scholz raised concerns about a possible US-EU trade war, reportedly saying:

“Whoever imposes tariffs should reckon with tariffs in return.”

Sector Performance: Autos Slide Amid Tariff Jitters

Auto stocks trended lower. BMW slid by 1.02%, while Volkswagen fell 0.85 %. Mercedes-Benz and Porsche also posted losses.

Investor sentiment took a hit amid President Trump’s plans for reciprocal tariffs, targeting pharma, semiconductor chips, and auto industries.

Bob Elliott, Chief Investment Officer at Unlimited Funds, underscored the uncertainty around US tariffs, saying:

“While the ultimate tariff efforts remain pretty uncertain, the direction of travel is clear – higher tariffs ahead and retaliation by trade partners.“

US Markets Recap

On Monday, February 10, US equity markets recovered from Friday’s pullback, with investors ignoring US tariff threats. The Nasdaq Composite Index gained 0.98%, while the Dow and S&P 500 advanced by 0.38% and 0.67%, respectively.

US metal producers led the gains, with Century Aluminum (CENX) surging by 10.22% while US Steel (X) rose 4.65%. AI stocks also trended higher, with Nvidia (NVDA) ending the session up 2.87%.

With a light economic calendar, US foreign policy and economic sentiment toward the US economy influenced market trends.

Will the Fed Chair Powell Spook Investors?

On February 11, Fed Chair Powell will deliver his semi-annual testimony on Capitol Hill. Markets will be looking for:

• Insights into inflation trends and the Fed’s rate path.
• Comments on labor market conditions and consumer spending.
• Possible concerns over tariff-driven inflation pressures.

A hawkish policy stance, driven by concerns over tariff-induced inflation, could weigh on risk assets. Tariffs may push import prices higher, fueling inflationary pressures. A more hawkish Fed could lead to higher borrowing costs, potentially affecting corporate earnings. Meanwhile, softer inflation rhetoric may support risk assets like the DAX.

Near-Term Outlook

The DAX’s outlook hinges on Fed Chair Powell’s testimony and upcoming inflation data.

• Softer inflation and a dovish Fed Chair may fuel risk asset demand, potentially pushing the DAX above 22,000.
• Hotter-than-expected inflation numbers and a hawkish Fed Chair may pull the DAX toward 21,500.

While Powell’s testimony and inflation data are key near-term drivers, trade tensions could fuel additional volatility. An escalation in US-EU trade tensions could drag the DAX lower, while a de-escalation may boost demand for risk assets.

As of Tuesday morning, US futures pointed to a testy session, with the Nasdaq 100 mini falling 90 points.

DAX Technical Indicators

Daily Chart

After Monday’s record high of 21,946, the DAX sits well above the 50-day and 200-day Exponential Moving Averages (EMAs), sending bullish price signals.

If the DAX surpasses Monday’s record high of 21,946, it could break out above the 22,000 threshold. A breakout from 22,000 may signal a move toward 22,350.

Conversely, a DAX drop to 21,750 may enable the bears to target 21,500 next. A fall through 21,500 could bring 21,000 into sight.

With the 14-day Relative Strength Index (RSI) at 71.31, the DAX remains in overbought territory (RSI higher than 70). Selling pressure may intensify if the DAX approaches the key resistance level of 21,946.

Final Thoughts

The DAX’s outlook depends on a mix of inflation data, central bank policies, and trade developments. Investors should monitor Powell’s testimony, upcoming inflation reports, and any shifts in US-EU trade developments.

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