Dax Index News: Tariff Shock Hits Outlook—Forecast Eyes 22,000 on Risk-Off Mood

DAX Tumbles on US Tariff Shock

The DAX faced heavy selling pressure early Thursday, March 27, as investors reacted to overnight news that President Trump announced a 25% tariff on all car imports. The Index dropped to 22,560, down 1.22% in early trade.

US markets also reeled from the news. Higher tariffs could fuel inflationary pressures, potentially forcing central banks into more hawkish policy stances. Higher borrowing costs may adversely impact earnings, while tariffs could affect the competitiveness of German automakers in the US.

Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, commented:

“Trump announces 25% tariff on auto imports from 2nd April, likely adding substantially to US car prices. More to come with reciprocal tariffs on 2nd April, with sectoral tariffs on other industries (pharma, semis, copper) also still likely at some point.”

Shane also shared a chart ranking Germany as the fifth largest auto exporter to the US, behind Mexico and Canada. While direct tariffs will impact demand for German cars and trade terms, indirect effects pose additional risks to automaker earnings. Mexico and Canada are manufacturing hubs for EU automakers.

Escalating Trade Uncertainty

The Kobeissi Letter warned that uncertainty is intensifying:

“The trade war is back: Markets are expecting Trump’s April 2nd reciprocal tariffs day to be the “end of uncertainty. But, we believe it will be the exact OPPOSITE, which is why tech stocks are down over -$400 billion this week. […] Barclays believes that April 2nd reciprocal tariffs imposed by President Trump will impact as many as 25 countries. US sectors likely affected include autos, pharma, and semiconductors.”

Sector Performance: Auto, Pharmas, and Tech Stocks Slide

Trump’s 25% tariff on autos sent German-listed auto stocks into a tailspin. Mercedes-Benz Group led the losses, tumbling 5.46%. Volkswagen, BMW, and Porsche also trended lower.

Fears of tariffs targeting pharmaceutical and tech firms pressured healthcare and tech stocks. Infineon Technologies fell 3.05%, while Fresenius Medical Care and Siemens Healthineers dropped 0.64% and 0.75%, respectively.

US Markets: Risk-Off Mood Takes Hold

On Wednesday, March 26, US equity markets saw heavy losses as investors responded to President Trump’s latest tariff move. The tariff shock overshadowed upbeat US Durable goods orders that signaled an improving demand environment.

The Nasdaq Composite Index dropped 2.04%, while the Dow and the S&P 500 fell 0.31% and 1.12%, respectively.

In the bond markets, 10-year US Treasury yields climbed amid a flight to safety, driving the US dollar higher.

US Labor Market and Fed Watch

Markets will now turn to the US labor market amid rising tariff tensions. Economists expect initial jobless claims to rise from 223k (week ending March 15) to 225k (week ending March 22).

A larger-than-expected increase in claims could raise concerns about the labor market and economic outlook. Higher jobless claims could signal softer wage growth, potentially impacting consumer spending, which accounts for over 60% of US GDP. Recession fears could further pressure risk assets.

Conversely, a lower jobless claims reading could boost optimism toward the US economy, supporting demand for risk assets.

Other stats include finalized Q4 GDP and pending home sales data. However, the labor market remains the primary focal point unless there is a marked revision to the GDP numbers.

Beyond economic data, traders should closely monitor tariff developments and FOMC commentary. A retaliatory response from the EU or China could accelerate the sell-off.

On Thursday, Trump warned:

“If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!”

Near-Term Outlook

The DAX’s path will depend on central bank policies, economic data, and trade developments:

• Bearish Scenario: Escalating US-EU trade tensions, weaker economic data, and hawkish central bank rhetoric could push the DAX toward 22,000.
• Bullish Scenario: Dovish central bank chatter, easing trade tensions, and upbeat economic data could drive the DAX toward its record high of 23,476.

As of Thursday morning, US futures pointed to a cautious open, with the Nasdaq 100 mini down 16 points.

DAX Technical Indicators

Daily Chart

Despite Wednesday’s sell-off, the DAX remains above the 50-day and 200-day Exponential Moving Averages (EMAs), signaling strong bullish momentum. However, economic data and tariff-driven volatility raise short-term downside risks.

If the DAX returns to 23,000, the bulls could target the record high of 23,476 next. A breakout above 23,476 may bring 23,750 into play.

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

The 14-day Relative Strength Index (RSI) at 47.94 indicates the DAX could drop to 22,000 before entering oversold territory (RSI< 30).

Final Thoughts

Key market forces influencing the DAX outlook include:

• US-EU trade tensions and retaliatory tariffs.
• ECB and Fed policy signals.
• US jobless claims and GDP data.

With volatility elevated, traders should remain attentive to policy updates and technical levels. View our latest reports here.