Dax Index News: Trump Tariff Risks Loom, DAX Futures Drop on Election Fears

DAX Advances in Pre-US Election Trade

On Tuesday, November 5, the DAX advanced by 0.57%, reversing a 0.56% loss from the previous session, closing at 19,256. Upbeat economic indicators from China and the US drove demand for DAX-listed stocks before a potentially bruising Wednesday, November 6.

Major Stock Movers: Industrial Stocks Lead

Heidelberg Materials rallied 2.74% as investors reacted to Citibank upgrading UK’s Melrose Industries’ free cash flow projections. Aviation stocks also advanced, with MTU Aero and Airbus Group advancing by 2.16% and 1.18%, respectively.

Tech stocks reversed losses from Monday’s session, with SAP and Infineon Technologies gaining 0.87% and 0.55%, respectively.

China’s Private Sector Boosts Demand Hopes

On Tuesday, China’s Caixin Services PMI signaled a pickup in economic momentum, driving demand for riskier assets. The Services PMI increased from 50.3 in September to 52.0 in October, following the better-than-expected manufacturing PMI numbers.

The increase in private sector activity aligned with hopes for further stimulus from Beijing, potentially boosting demand for German goods.

Germany’s Factory Orders and Services PMI in Focus

On Wednesday, November 6, German factory orders and services sector data could influence the ECB rate path. Economists forecast factory orders to rise 1.5% in September after sliding by 5.8% in August. A pickup in demand for German goods may signal a shift in economic momentum, potentially reducing expectations for a 50-basis point December ECB rate cut.

However, the service sector PMI data will likely influence the ECB rate path more, as it remains a significant contributor to inflation. According to the preliminary survey, the Services PMI increased from 50.6 in September to 51.4 in October. An upward revision could dampen bets on a 50-basis point December ECB rate cut, potentially reducing demand for DAX-listed stocks.

US Presidential Election Result Pivotal for the DAX

While the economic indicators require consideration, the US presidential election is the main event. A Trump victory may weigh on demand for DAX-listed stocks, potentially pulling the index toward 18,750, as his tariff policies could strain US-Germany trade relations.

Trump currently leads Kamala Harris with 230 electoral votes to her 185, though key swing states remain undecided, leaving the outcome uncertain.

A Kamala Harris win may drive the DAX toward its all-time high of 19,675.

US ISM Services PMI Signals Positive Economic Momentum

On Tuesday, the ISM Services PMI rose from 54.9 in September to 56.0 in October. Economists had predicted the PMI to drop to 53.8. The pickup in service sector activity signaled a robust US economy as it accounts for around 80% of GDP. However, sub-components, including the Employment Index, also trended higher, reducing bets on a 25-basis point December Fed rate cut.

According to the CME FedWatch Tool, the chances of a 25-basis point December Fed rate cut fell from 79.6% on November 4 to 68.6% on November 5. Falling bets on a December Fed rate cut limited the DAX’s gains

US Equity Market Overview

On Tuesday, November 5, US equity markets advanced as investors responded to early results, giving Trump an early lead in the US presidential election. The Nasdaq Composite Index rallied 1.43%, while the Dow and the S&P 500 gained 1.02% and 1.23%, respectively.

Near-Term Outlook

In the near term, DAX trends will depend on the US Presidential Election and the upcoming Fed decision. A Trump win and Fed signals to hold interest rates in December could adversely impact demand for DAX-listed stocks. Conversely, a Kamala Harris victory could fuel a DAX rally.

Futures indicate a mixed start to the Wednesday session. DAX futures were down 78 points, while the Nasdaq mini futures surged by 258 points.

Investors should monitor the US presidential election results closely. Stay updated with our latest news and analysis to manage risks effectively.

DAX Technical Indicators

Daily Chart

The DAX sits above the 50-day and 200-day EMAs, sending bullish price signals. However, a significant drop below these levels could shift sentiment to bearish.

A move back to 19,350 could signal bullish momentum, potentially targeting 19,500 as the next resistance. Furthermore, a break above 19,500 may allow the bulls to target the DAX’s all-time high of 19,675.

Investors should consider the US presidential election results, which could influence market sentiment.

Conversely, a DAX drop below the 50-day EMA and 19,000 could support a fall toward the 18,750 level.

With the 14-day RSI at 50.22, the DAX may have room to climb to 19,675 before signaling overbought conditions.