Dax Index News: US Tariff Fears Weigh, Can PMI Data Drive a Rebound Today?

DAX Slips Amid US Tariff Fears: Can PMIs Push the DAX to New Highs?

On Friday, December 13, the DAX slipped by 0.10%, reversing Thursday’s 0.13% gain to close at 20,406. Earlier in the session, the DAX hit a record high of 20,523 before pulling back below 20,500.

Uncertainty about the ECB rate path, a sluggish German economy, and lingering threats of US tariffs weighed on sentiment.

Auto and Insurance Stocks Cushion Losses

On Friday, Munich Re led the gains, surging 5.57% after projecting €6 billion in profits for 2025. Hannover Re benefited from the news, climbing 1.51%.

Auto stocks shined as Volkswagen rose 1.36%, while Mercedes Benz Group and Porsche gained by 0.48% and 0.42%, respectively. BMW also closed higher.

However, real estate stock Vonovia slid by 2.48% amid uncertainty about economic uncertainty. Bayer declined by 2.08%, dragged lower by weakness in healthcare stocks.

German Trade Data Underscores Demand Concern

On Friday, German trade data fueled demand concerns amid potential US tariffs on EU goods. Exports slid by 2.8% month-on-month in October after a 1.8% fall in September, reflecting weakening global demand. Similarly, imports fell, signaling slowing domestic consumption.

German wholesale price trends aligned with weakening demand, stagnating in November after rising 0.4% in October.

What Do the Experts Think About the ECB’s Inflation Worries?

Mario Cavaggioni, portfolio manager at HY Market, remarked on Germany’s wholesale price trends, saying,

“ECB GC remains divided between doves (concerned about growth) and hawks (concerned about inflation)… where is this stubbornly high inflation risk?”

Cavaggioni also shared news of Germany’s Bundesbank cutting growth forecasts and raising concerns about a trade war. On Friday, the Bundesbank projected the German economy to contract by 0.2% in 2024 and to grow modestly by 0.2% in 2025. However, Germany’s central bank reportedly warned the economy could contract by 0.5% in 2025 if Trump rolls out tariffs.

German Private Sector in Focus Amid Economic Jitters

On Monday, preliminary private sector PMIs will draw interest as key economic indicators. Economists forecast the Manufacturing PMI to increase from 43.0 in November to 43.8 in December. Meanwhile, economists expect a deeper contraction across the services sector.

Weaker-than-expected data could impact demand for DAX-listed stocks, especially with US tariffs looming over the German economy.

Beyond Germany, Eurozone data could also affect the ECB rate path. Rising wages may fuel consumer spending and demand-driven inflation, potentially lowering bets on multiple ECB rate cuts. Economists predict wages to increase by 4.5% in Q3 2024, mirroring Q2 2024.

US Markets Retreat: Fed in Focus

US equity markets ended mixed on Friday. The Nasdaq Composite Index extended its weekly winning streak to four weeks, gaining 0.12%. Broadcom Inc. (AVGO) jumped by 24.43% after announcing better-than-expected revenue projections.

However, the S&P 500 closed the session flat, while the Dow fell by 0.20%, extending its losing streak to seven sessions.

Higher 10-year US Treasury yields, rising for the fifth session, reflected concerns about the Fed rate path. Treasury yields weighed on risk appetite.

US Services Sector and the Fed Rate Path

Turning to Monday’s US session, the Services Sector PMI could influence bets on a Q1 2025 Fed rate cut. Economists forecast the US Services PMI to drop from 56.1 in November to 55.7 in December, which could dictate expectations for a Q1 2025 Fed rate cut.

A more dovish Fed rate path could boost demand for DAX-listed stocks. Conversely, an unexpected rise in the Services PMI could temper Q1 2025 Fed rate cut bets, potentially weighing on the DAX.

According to the CME FedWatch Tool, the probability of a 25-basis point January Fed rate cut declined from 27.6% on December 6 to 18.0% on December 13.

Near-Term Outlook

In the near term, DAX trends hinge on private sector PMI data, ECB chatter, and US tariffs.

A more marked contraction across Germany’s private sector alongside US tariff threats could drag the DAX toward 20,000. Conversely, upbeat PMI data, the absence of tariff announcements, and ECB support for multiple rate cuts could drive the DAX to new highs.

Investors should also consider the Fed rate path and stimulus-related news from China, which could overshadow the PMI data.

As of Friday morning, futures pointed to a positive start to the week. DAX futures were up 32 points, while the Nasdaq-mini futures gained 14 points. Investors brushed aside disappointing economic data from China that signaled a slump in domestic consumption.

DAX Technical Indicators

Daily Chart

Despite Friday’s retreat, the DAX sits comfortably above the 50-day and 200-day EMAs, affirming bullish price signals.

If the DAX returns to Friday’s record high of 20,523, it could signal a move toward 21,750 next. Furthermore, a breakout from 20,750 may enable the bulls to target the 21,000 level.

Private sector PMIs, ECB commentary, and US tariff-related news chatter will influence DAX trends.

Conversely, a DAX break below 20,350 could bring the 20,000 level into play. A fall through 20,000 may enable the bears to target the 19,675 support level.

The DAX remains in overbought territory, with the 14-day RSI at 71.65 (above 70). Selling pressure may intensify at Friday’s all-time high of 20,523.

Final Thoughts

The DAX remains sensitive to global drivers such as private sector activity, US tariffs, and ECB guidance. Investors should brace for volatility as markets react to these factors.

Explore in-depth forecasts and actionable strategies here for navigating DAX volatility.