Dax Index News: US Tariffs and Inflation Risks Pressure German Stocks – Forecast

DAX Ends Three-Day Winning Streak on Renewed Tariff Concerns

On Friday, February 7, the DAX fell 0.53%, partially reversing Thursday’s 1.47% rally, closing at 21,902.

Fears of an escalating global trade war impacted risk sentiment as President Trump warned of reciprocal tariffs. So far, only China has retaliated against US tariffs, announcing plans to roll out levies on February 10, raising fears of an escalation in the US-China trade war.

Sector Highlights: Autos Stumble on Porsche Margin Warning

Porsche tumbled 7.15% after warning about a grim margin forecast, dragging the broader auto sector lower. Volkswagen slid by 2.27%, while BMW fell 1.60%. Mercedes-Benz Group also posted losses.

Trade war fears rattled investors, sending shares tumbling. Adidas ended the session down 2.27%.

US Industrial Production and Trade Data Send Mixed Signals

Germany’s trade surplus widened to €20.7 billion in December from €19.7 billion in November. Exports climbed 2.9%, accelerating from a 2.1% increase in November. The trade data drew significant interest ahead of potential US-EU trade negotiations. Exports to the US fell 3.5% while imports increased 3.0%, narrowing the EU’s trade surplus with the US.

Meanwhile, industrial production slid by 2.4% in December, reversing a 1.5% rise in November.

December’s data underscored Germany’s fragile economic outlook as weak global demand remained a headwind.

Export Views on Germany’s Economy and Potential US Tariffs

Daniel Kral, macro specialist at Oxford Economics, remarked on the December production numbers:

“German industry ended the year on a very weak footing. The cumulative decline from its late 2010s peak is approaching 20% (around half of that for GVA) with the weakness broad-based. Leading indicators and likely US tariffs dash hopes of a quick turnaround. Wake up call…”

US Data Sinks Bets on an H1 2025 Fed Rate Cut

Friday’s US Jobs Report and Michigan Consumer Sentiment Survey impacted expectations for a Fed rate cut in H1 2025.

The US unemployment rate fell to 4.0% in January, down from 4.1% in December, even as the participation rate increased. Average hourly earnings rose 4.1% year-on-year, matching December’s increase, signaling labor market resilience.

Meanwhile, inflation expectations spooked investors. The Michigan Inflation Expectations Index jumped from 3.3% in January to 4.3% in February. Expectations of higher inflation could boost near-term spending, potentially fueling demand-driven inflation.

Wall Street Tumbled as Traders Braced for Tariff Fallout

US equity markets posted losses on Friday, February 7 as traders reacted to the US data and Trump’s tariff warnings. The Nasdaq Composite Index reversed its Thursday gains, sliding 1.36%, while the Dow and S&P 500 fell 0.99% and 0.95%, respectively.

Despite beating earnings estimates, Amazon.com (AMZN) dropped by 4.05% on a weaker Q1 outlook. Apple Inc. (AAPL) fell 2.40% after reports that China may launch a probe into its policies and fees.

US Economic Calendar: Inflation in Focus

On Monday, February 10, consumer inflation expectations require consideration after Friday’s Michigan Consumer Sentiment Survey. Economists expect consumer inflation expectations to rise 3.1% in January, up from 3.0% in December.

A higher inflation reading could support a more hawkish Fed rate path, potentially weighing on risk assets. A higher-for-longer rate path may raise borrowing costs, affecting earnings. Conversely, softer inflation expectations could boost demand for German-listed stocks.

Investors should also monitor tariff developments and FOMC members’ reactions to Friday’s US data for further monetary policy insights.

Near-Term Outlook

The DAX’s performance will depend on inflation data and central bank forward guidance.

• Softer inflation and dovish central bank signals could drive the DAX above 22,000.
• Stronger inflation and a hawkish Fed may impact rate-sensitive German stocks, potentially pulling the Index toward 21,500.

Additionally, US tariff developments remain a risk. Tariffs on EU goods and an escalation in the US-China trade war could weigh on the DAX and broader markets.

As of Monday morning, futures signaled a positive start.  DAX futures were up 26 points, while the Nasdaq 100 mini gained 105 points.

DAX Technical Indicators

Daily Chart

Despite renewed tariff concerns and a more hawkish Fed rate outlook, the DAX remains well above the 50-day and 200-day Exponential Moving Averages (EMAs). The EMAs affirm bullish price signals.

A breakout above the February 7 record high of 21,945 would support a move above 22,000. A break above 22,000 may enable the bulls to target the 22,350 level next.

Conversely, if the DAX drops below 21,750, it could signal a fall toward the key support level at 21,500.

With the 14-day Relative Strength Index (RSI) at 69.78, the DAX could climb to 21,945 before entering overbought territory (above 70 RSI).

Conclusion: Key Drivers to Watch

Traders should focus on inflation data and central bank policy signals for market direction.

Additionally, external factors such as tariff developments could significantly affect the DAX’s outlook.

Read our detailed analysis of how global market dynamics influence the DAX’s performance here.