Dax Index News: Tariff Uncertainty Pressures Outlook and Sentiment Today

DAX at Risk as Tariff Uncertainty Lingers

The DAX Index opened Tuesday, January 21, down 0.25% to 20,937. Sentiment toward US tariffs remained the key driver following President Trump’s inauguration on Monday, January 20.

While President Trump initially refrained from commenting on EU tariffs, he later emphasized the need for the EU to increase US oil and gas purchases. He emphasized,

“The one thing they can do quickly is buy our oil and gas. We will straighten that out with tariffs, or they have to buy our oil and gas.”

Mohamed A. El-Erian, President of Queen’s College, Cambridge, and former Pimco CEO/co-CIO, highlighted the uncertainty about Trump’s policies, saying,

“President Donald Trump reinforced his campaign messages including on the fiscal, trade and immigration issues that economists and market participants are particularly focused on. The emphasis now shifts to the when and what re details.”

Sector Performance: Autos Slide on Renewed Tariff Threats

BMW and Volkswagen slid by 1.79% and 1.40%, respectively, with Porsche and Mercedes-Benz Group also posting early losses. Trump’s renewed threat of import duties on EU goods impacted the auto sector, a likely US target for tariffs.

German Economic Sentiment Data in Focus

On January 21, ZEW Economic Sentiment figures will draw interest. Economists forecast Germany’s ZEW Economic Index to slip from 15.7 in December to 15.3 in January.

A steeper decline would indicate deteriorating confidence in the German economy amid threats of US tariffs on EU goods. However, even if the ZEW Economic Index beats expectations, the market’s focus on tariff developments may limit its impact.

US Markets and Trump’s Policy Moves

US futures markets advanced ahead of the European opening bell. The Nasdaq Composite mini gained 41 points, while S&P 500 mini added 13 points The Dow mini rose 130 points.

In the bond markets, 10-year US Treasury yields slid to a Tuesday morning low of 4.532%. Hopes for a gradual rollout of tariffs initially eased fears over inflation and concerns about a more hawkish Fed rate stance.

Trump’s First Full Day in Office: What to Watch

In the upcoming US session, Trump’s policy maneuvers will influence risk sentiment. Continued threats of sweeping tariffs could impact investor appetite for export-focused German stocks.

US tariffs could weaken demand for German goods, company earnings, and valuations.

However, traders should monitor FOMC member comments regarding Trump’s policy goals. Insights into inflation and the Fed rate path could be crucial in the near term. Calls for patience to consider Trump’s tariff goals would likely pressure riskier assets. Conversely, a more dovish Fed rate path could drive the DAX to record highs.

Near-Term Outlook

The DAX’s near-term trend hinges on central bank forward guidance and US tariff developments. Expectations of more hawkish rate paths or US tariff threats could drag the DAX toward 20,500. Conversely, continued support for rate cuts and the absence of tariff-related news could push the DAX to new highs.

DAX Technical Indicators

Daily Chart

After a five-day winning streak, the DAX remains above the 50-day and 200-day Exponential Moving Averages (EMAs), affirming bullish price signals.

If the DAX breaks out from Monday’s record high of 21,055, the Index could target 21,350 next. A break above 21,350 would bring 21,500 into sight.

Conversely, a DAX break below 20,750 could signal a drop toward 20,500. A fall through 20,500 would enable the bears to target the 50-day EMA.

With the 14-day Relative Strength Index (RSI) at 73.35, the DAX is in overbought territory (RSI higher than 70). Selling pressure could intensify at Monday’s high of 21,055 due to overbought conditions reflected by the RSI.

Final Thoughts

The DAX faces a potential jump in near-term volatility, influenced by central bank policies and US tariff developments. Investors should monitor updates on tariffs and Fed commentary for directional cues.

Stay ahead of market trends by following our updates on DAX movements, US tariff developments, and central bank policies here to navigate the evolving financial landscape effectively.