Dax Index News: Outlook Strong Despite Recession Warnings and US Tariff Threats

DAX Nears 20,000 as Sentiment Turns Bullish

Can the DAX break through the 20,000 barrier, or will market headwinds hold it back?

On Monday, December 2, the DAX surged by 1.57%, following Friday’s 1.03% rally, closing at a record high of 19,934.

Economic indicators from the Euro area signaled a weakening macroeconomic environment, raising expectations for a December ECB rate cut. Expectations for a more dovish ECB rate path drove demand for DAX-listed stocks.

However, uncertainty persists. Can the DAX sustain its bullish momentum, or will potential US tariffs and macroeconomic headwinds dampen investor confidence?

Tech and Retail Stocks Drive Momentum

Retail and tech stocks led Monday’s gains, supported by the prospect of a more dovish ECB. Adidas rallied 3.18%, while online retailer Zalando gained 2.21%. Lower borrowing costs could boost consumer spending.

Tech stocks SAP and Infineon Technologies extended their gains from Monday, advancing by 2.73% and 1.01%, respectively. Lower interest rates could reduce borrowing costs for capital-intensive companies, supporting company earnings.

However, auto stocks had a mixed session. BMW rallied 2.66%, while Volkswagen declined by 0.07%, affected by a workers’ strike on Monday.

Eurozone Manufacturing Slump Raises Recession Fears

Germany’s HCOB Manufacturing PMI remained at 43 in November, down from a preliminary 43.2. The continued manufacturing sector contraction aligned with forecasts of a 0.2% contraction in Germany for 2024.

Similarly, the Eurozone HCOB Manufacturing PMI also sent a gloomy picture of the region’s economy.

The weaker manufacturing sector data could pressure the ECB into aggressive rate cuts in 2025 to bolster the Euro area economy. Significantly, the Eurozone’s manufacturing sector woes coincided with ongoing threats of US tariffs on EU goods.

Meanwhile, ECB Chief Economist Philip Lane remarked on a potential shift in the ECB’s stance toward inflation, reportedly saying,

“At some point, we will make the transition from having been driven by the very important disinflation challenge to the new challenge of keeping inflation at 2% on a sustainable basis.”

Expert Views on Germany’s Manufacturing Sector

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented on November’s Manufacturing PMI data, stating:

“The situation for German industry is looking pretty grim. People are feeling the pinch as reports of companies in the manufacturing sector planning massive job cuts are coming in almost daily. New orders aren’t dropping as fast as they were in recent months, but that’s little consolation. When we look at foreign orders alone, the situation has actually got worse.”

US Economic Signals and the Fed Rate Path

The US ISM Manufacturing PMI painted a rosier picture of the US economy, rising from 46.5 in October to 48.4 in November. Significantly, the New Orders Index climbed from 47.1 to 50.4, indicating improving demand for US goods.

Monday’s PMI data followed better-than-expected services sector data and consumer spending, pointing to a resilient US economy.

However, the continued manufacturing sector contraction bolstered bets on a December Fed rate cut. According to the CME FedWatch Tool, the chances of a Fed rate cut jumped from 66.0% on November 29 to 75.1% on December 2.

US Market Trends Lend Support

How might a resilient US economy influence global markets and the DAX?

On Monday, December 2, US equity markets delivered mixed performances. The Nasdaq Composite Index advanced by 0.97%, the S&P 500 ended the session up 0.24%, while the Dow declined by 0.29%.

Super Micro Computer (SMCI) was the best performer, soaring 28.68%. Investors reacted to reports of an independent review finding no evidence of fraud. The manufacturing sector data contributed to the gains.

US Economic Calendar: Labor Market in Focus

In Tuesday’s US session, the JOLTs Job Openings Report will require consideration. Economists expect job openings to increase from 7.443 million in September to 7.480 million in October. A larger-than-expected increase could support positive sentiment toward the US economy.

How will US labor market data influence the Fed rate path and the DAX?

Upbeat job openings could suggest a resilient labor market, supporting wage growth. Strong wage growth may fuel consumer spending and demand-driven inflation, potentially tempering bets on a December Fed rate cut.

A less dovish Fed rate path may dampen demand for riskier assets, pulling the DAX below 19,750. Conversely, continued support for a December Fed rate cut could drive the DAX through 20,000.

Near-Term Outlook

In the near term, DAX movements will hinge on Services PMI and labor market data, central bank forward guidance, and US Tariff-related chatter.

Lower-than-expected PMIs, a more dovish ECB rate path, and silence on US tariff threats could drive the DAX through 20,000. On the other hand, upbeat PMI and labor market data, falling bets on December rate cuts, and US tariff threats could pull the DAX below 19,750.

As of Tuesday morning, futures signaled a positive session ahead. DAX futures were up by 12 points, while the Nasdaq mini futures gained 7 points.

Investors should monitor Eurozone economic data, central bank remarks, and tariff-related updates for trading opportunities.

DAX Technical Indicators

Daily Chart

After Monday’s rally, the DAX remains well above the 50-day and 200-day EMAs, sending bullish price trends.

If the DAX breaks its all-time high of 19,934, it may target 20,000 next. Furthermore, a break above 20,000 could signal a move toward 20,350.

US labor market data, central bank commentary, and US tariff-related news will influence DAX trends.

Conversely, a DAX drop below 19,750 may enable the bears to target 19,500. A fall through 19,500 could signal a fall toward 19,350.

With the 14-day RSI at 66.24, the DAX may rise to 20,000 before entering overbought territory.

Where do you think the DAX is heading next? Will it surpass 20,000, or are we in for a correction? Get ahead of market trends by clicking here for exclusive expert analysis and forecasts.