Dax Index News: Near-Term Forecast Hinges on US Tariffs, Inflation, and Fed Policy

DAX Slides on US Jobs Report: What’s Next

The latest US Jobs Report fueled expectations of a more hawkish Fed rate path, shaking demand for riskier assets. Ongoing concerns about China and demand for German goods also remained headwinds amid US tariff threats. These headwinds continue to weigh on the DAX, contributing to its uncertain near-term outlook.

On Friday, January 10, the DAX slid by 0.50%, following Thursday’s 0.06% drop to close at 20,215. Significantly, the Index extended its losing streak to three sessions.

Insurers Stumble While Auto Stocks Shine

Online retailer Zalando SE led the declines, tumbling 5.39% on Friday amid concerns about a weakening economic backdrop. Capital-intensive firms like Siemens Energy slid by 4.62% due to hawkish Fed rate expectations.

Munich Re and Hannover Re contributed to the losses as investors considered the possible impact of the California fires on the sector.

However, auto stocks enjoyed a much-needed boost. Mercedes-Benz Group stated that quarterly sales were up 5% quarter-on-quarter, driving the stock up 3.73%. BMW and Volkswagen advanced by 1.14% and 0.74%, respectively, with Porsche closing the session in positive territory

US Jobs Report and Higher Yields Signal a Hawkish Fed Rate Path

On January 10, US labor market data beat expectations, suggesting a higher-for-longer Fed rate path. Nonfarm payrolls jumped by 256k in December, up from 212k in November, reflecting robust labor market resilience despite tighter monetary policies. Additionally, the unemployment rate unexpectedly fell from 4.2% in November to 4.1% in December.

Tighter labor market conditions may boost wages, potentially fueling consumer spending and demand-driven inflation. A higher inflation outlook would support a more hawkish Fed rate path. Elevated borrowing costs may affect corporate earnings and valuations.

US Markets and EUR/USD Slide on Waning Expectations for Fed Rate Cuts

On Friday, January 10, US markets suffered heavy losses. The Dow and the Nasdaq Composite Index slid by 1.63% and 1.63%, respectively, while the S&P 500 declined by 1.54%.

In the bond market, 10-year US Treasury yields climbed to a session high of 4.788%, reflecting a more hawkish Fed policy outlook.

Meanwhile, the EUR/USD pair extended its losses from Thursday, declining by 0.57% to $1.0398. While a weaker EUR may counter the effects of higher borrowing costs, it may not fully offset pressure from US tariffs.

US Inflation in Focus

On Monday, January 13, consumer inflation expectations will require consideration ahead of Wednesday’s crucial US CPI Report. Economists forecast consumer inflation expectations to increase by 3.1% in December, up from 3.0% in November. Consumers adjust spending plans based on their inflation outlook.

Higher inflation expectations could signal a pickup in consumer spending and drive inflationary pressures, leading to a more hawkish Fed rate path. Conversely, softer numbers may raise hopes of a March Fed rate cut, potentially driving demand for riskier assets.

Near-Term Outlook

The DAX’s near-term trends will hinge on US inflation data, central bank commentary, and geopolitical factors such as US tariff policies and stimulus measures from China. Hotter-than-expected US inflation figures and hawkish Fed chatter could pull the DAX below 20,000. However, softer inflation may push the DAX toward its record high of 20,523.

Investors should also monitor stimulus news from China and US tariff developments. These are key factors influencing market sentiment. Fresh stimulus measures from Beijing, targeting consumption and demand, could improve the outlook for German export companies.

As of Monday morning, futures pointed to a test session. DAX futures were down 39 points, while the Nasdaq 100 mini slid by 118 points. December trade data from China weighed on market risk sentiment in the Asian session. A surge in exports and rebound in imports may draw Trump’s interest.

DAX Technical Indicators

Daily Chart

Despite Friday’s retreat, the DAX remains comfortably above the 50-day and 200-day Exponential Moving Averages (EMAs), sending bullish price signals.

If the DAX returns to 20,350, it could target the record high of 20,523 next. A break above 20,523 may signal a move toward the 20,750 level.

US inflation data, tariff developments, and central bank commentary will influence DAX trends.

Conversely, a DAX drop below 20,000 may enable the bears to target the 50-day EMA and the 19,675 support level.

With the 14-day Relative Strength Index (RSI) at 56.86, the DAX could return to 20,523 before entering overbought territory (RSI higher than 70).

Final Thoughts

Despite global headwinds, a dovish ECB and a weaker euro could lend support to German exporters. Economic data, central bank policies, and geopolitical developments will remain pivotal in drawing the DAX’s outlook.

Read our detailed analysis of how global market dynamics influence the DAX’s performance here.