The DAX rebounded on Tuesday, March 25, rallying 1.13% to 23,110. US tariff developments snapped a three-day losing streak for the Index.
On March 24, President Trump signaled a softer stance on planned April 2 tariffs. Trump suggested that many countries could receive tariff relief. He also hinted at sector-specific reciprocal levies, easing fears of broad-based tariffs on German exports.
Investor sentiment improved across the auto, pharmaceutical, and tech sectors, aided by Trump’s latest tariff shift. President Trump had previously warned of sweeping tariffs on autos, semiconductors, and pharmaceuticals.
Pharmaceuticals: Bayer AG led the Tuesday rally, soaring 5.18% on hopes of a softer US stance on pharmaceutical firms. Fresenius Medical Care AG gained 0.89%.
Autos: BMW climbed 1.86%, while Mercedes-Benz Group, Volkswagen, and Daimler also posted gains.
Tech: SAP and Infineon Technologies advanced by 1.33% and 0.80%, respectively.
Sectors likely to benefit from the Fiscal Reform Bill also regained ground:
Germany’s Ifo Business Climate Index rose from 85.3 in February to 86.7 in March, signaling a more favorable economic outlook. The Ifo Expectations Index jumped from 85.6 to 87.7 in March, indicating hopes of an economic recovery.
Improving business sentiment could spur investment and job creation, potentially boosting consumer confidence and spending. Despite improved sentiment, the prospect of tariff-related risks kept expectations for ECB rate cuts intact.
US data also influenced risk appetite. The US CB Consumer Confidence Index dropped to 92.9 in March, down from 100.1 in February. Consumer concerns about income, the labor market, and the economy pressured sentiment.
Weaker consumer confidence could adversely impact spending and dampen demand-driven inflation. With private consumption accounting for over 60% of US GDP, reduced spending may slow GDP growth and support a more dovish Fed stance. Weaker growth and bets on multiple Fed rate cuts supported demand for risk assets.
US equity markets consolidated Monday’s gains on Tuesday, March 25. The Nasdaq Composite Index rose 0.46%, while the Dow and the S&P 500 gained 0.01% and 0.16%, respectively.
Nonetheless, ongoing tariff uncertainty and concerns about the US economy capped the gains.
Turning to the US session on Wednesday, March 26, durable goods orders will draw investor interest. Economists expect durable goods orders to decline by 1% month-on-month in February after surging 3.1% in January.
Traders should also track tariff-related headlines and FOMC commentary on tariffs, inflation, the Fed rate path, and the economy.
The DAX’s near-term outlook will hinge on central bank forward guidance, German unemployment data, the US Personal Income and Outlays Report, and tariff updates.
Potential DAX Scenarios:
As of Wednesday morning, the DAX futures were up 38 points, while the Nasdaq 100 mini dropped 13 points, pointing to a cautious start.
The DAX sits above the 50-day and 200-day Exponential Moving Averages (EMAs), signaling strong bullish momentum. However, trade-driven volatility remains a near-term downside risk.
With the RSI at 56.64, the DAX remains below overbought levels (above 70), leaving room for a return to its all-time high of 23,476.
Traders should stay alert to:
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With over 28 years of experience in the financial industry, Bob has worked with various global rating agencies and multinational banks. Currently he is covering currencies, commodities, alternative asset classes and global equities, focusing mostly on European and Asian markets.