Dax Index News: Tariff Developments and German Fiscal Policy Drive DAX Sentiment

DAX Opens Lower Amid Tariff Concerns and US Inflation Outlook

US tariff fears and inflation expectations set the tone for Thursday, March 13. Investors face several risks, including potential tariffs on EU goods, a more hawkish Fed stance, and resistance from German lawmakers to the coalition government’s fiscal plans.

The DAX Index opened lower on Thursday, March 13, falling 0.51% to 22,561.

Sector Performance: Auto Stocks Decline, Tech Stocks Advance

Auto stocks fell early in the Thursday session as focus returned to potential tariffs on EU goods

• Daimler Truck Holding plunged 8.88%, with Volkswagen, BMW, Mercedes-Benz Group, and Porsche declining early in the session.
• Infineon Technologies and SAP dropped by 3.37% and 0.41%, respectively.

Eurozone Industrial Production in Focus

Eurozone industrial production data, set for release on March 13, will offer insights into the demand environment. Economists forecast industrial production to rise 0.6% month-on-month in January after sliding 1.1% in December.

A higher production reading would signal an improving demand backdrop, typically supporting demand for DAX-listed stocks. However, Trump’s tariff threats could offset any positive impact. Sweeping tariffs on EU goods could weaken demand and disrupt industrial output.

US Tariffs and Germany’s Fiscal Plans Take Center Stage

While the data requires consideration, the German coalition government’s progress on its fiscal plans and tariff developments remain crucial market drivers. Rising threats of sweeping 25% tariffs on EU goods and resistance toward the fiscal plan could pressure demand for German-listed stocks.

After rising tensions between the US and Canada, Washington could target the EU next.

Commenting on trade policy, Mohamed A. El-Erian, President of Queen’s College, Cambridge, noted:

“Yesterday’s tariff focus was mainly on the heightened tensions between Canada and US; today, the focus shifts to the EU-US tit-for-tat.”

Meanwhile, Germany’s fiscal package is expected to face debate in the Bundestag. Mario Cavaggioni, portfolio manager at HY Market, recently outlined the legislative timeline:

• Debate the planned financial package: March 13 and 18.
• Potentially vote on the package: March 18.
• Vote on the two special funds: March 21.

Progress on approving the infrastructure fund, debt brake reforms, and fiscal rules could boost sentiment in key sectors, including construction, defense, energy, telecommunications, IT, and tech.

US Market Recap: Inflation, Tariffs, and Ukraine Developments Drive Sentiment

On Wednesday, March 12, US equity markets delivered mixed performances. Softer headline US inflation and optimism regarding an end to the Ukraine war provided some relief. However, tariff concerns remained a headwind.

The tech sector benefited from the US inflation data, with the Nasdaq Composite Index gaining 1.22%, while the S&P 500 rose 0.49%. However, the Dow bucked the trend, falling 0.20%.

The US annual inflation rate dropped from 3% in January to 2.8% in February, with core inflation easing to 3.1% from 3.3%. However, economists expect the Fed’s preferred Core PCE Price to rise in February, tempering Fed rate cut bets.

Tony Sycamore, market analyst at IG.com, commented:

“The downside surprise was largely driven by a decline in the volatile airfares and car insurance components, neither of which have a significant read through to core PCE – hence, GS Econ now expect that the core PCE price index rose 0.29% in February (vs. their expectation of 0.25% before the CPI release).”

US Labor Market and Producer Prices in Focus

On Thursday, US producer prices will give investors insights into the inflation outlook. Economists expect producer prices to rise 3.3% year-on-year in February, down from 3.5% in January.

A lower-than-expected print could signal softer inflationary pressures, supporting a more dovish Fed rate path. Conversely, a higher-than-expected reading could temper bets on a June Fed rate cut, impacting risk assets.

Additionally, US labor market data also require consideration. Economists forecast initial jobless claims to rise to 225k (week ending March 8), up from 221k (week ending March 1). Following February’s Jobs Report, a spike in jobless claims may fuel recession fears, pressuring risk assets. However, a drop in claims would leave producer prices to dictate market trends.

Beyond economic data, traders should remain vigilant on tariff developments, which could dictate short-term market direction.

Near-Term Outlook

The DAX’s trajectory will hinge on central bank policies, tariff developments, and fiscal policy progress:

• Bearish Scenario: Rising US-EU trade tensions, limited fiscal progress in Germany, and a hawkish Fed could push the DAX toward 22,500.
• Bullish Scenario: A dovish Fed stance, easing trade tensions, and fiscal policy advancements could drive the DAX toward a record high of 23,476.

As of Thursday morning, US futures pointed to a gloomy start to the session, with the Nasdaq 100 mini down 157 points.

DAX Technical Indicators

Daily Chart

After Wednesday’s rebound, the DAX remains well above the 50-day and 200-day Exponential Moving Averages (EMAs). Recent trends indicate heightened volatility, even as the broader trend remains bullish.

If the DAX returns to 22,750, the bulls could target 23,000 next. A breakout above 23,000 could signal a move toward the record high of 23,476.

Conversely, a DAX drop below 22,500 could bring 22,000 into sight. A fall through 22,000 may enable the bears to target the 50-day EMA.

The 14-day Relative Strength Index (RSI) at 52.39 suggests the DAX could rise to the March 6 record high of 23,476 before entering overbought territory (RSI > 70).

Final Thoughts

Tariffs, central bank policies, and Germany’s fiscal goals remain the dominant market forces. Key areas for traders to watch include:

• US-EU trade relations and tariff developments.
• ECB and Fed forward guidance on interest rates.
• Germany’s fiscal package, debt rules, and infrastructure funding.
• US labor market data and inflation trends.

With elevated market volatility, staying ahead of policy changes and technical signals will be essential for identifying trading opportunities. View our latest reports here.