Dax Index News: US Tariffs Weigh on DAX Forecast, PMI Data in Focus

DAX Steadies After Tariff-Fueled Sell-Off

On Tuesday, February 4, the DAX climbed 0.36%, partially reversing Monday’s tariff-fueled 1.40% sell-off, closing at 21,506. Corporate earnings contributed to the DAX’s gains, though potential US tariffs on EU goods remained a headwind.

Sector Highlights: Infineon Technologies Soars

Infineon Technologies soared 10.37% after beating earnings estimates and raising its forward guidance. SAP benefitted, advancing by 1.58%.

Meanwhile, automakers got a much-needed boost on Ferrari’s revenue and core earnings outlook. Porsche gained 0.87%, with BMW, Mercedes-Benz Group, and Volkswagen closing higher. However, the gains were modest, with EU automakers remaining a potential target for US tariffs.

German Services PMIs in Focus

On Wednesday, February 5, finalized Services PMIs will be in focus. According to the preliminary survey, Germany’s HCOB Services PMI increased from 51.2 in December to 52.5 in January. A pickup in service sector activity and higher input prices could temper bets on aggressive ECB rate cuts. The services sector remains a significant inflation contributor.

A less dovish ECB rate path may signal higher borrowing costs, potentially impacting corporate earnings and valuations. The DAX could pull back on upward revisions to the PMI data.

Conversely, a downward revision may bolster the case for multiple ECB rate cuts, boosting demand for German-listed stocks.

US JOLTS Job Openings Boost Fed Rate Cut Hopes

JOLTS job openings slid from 8.156 million in November to 7.6 million in December, boosting hopes for an H1 2025 Fed rate cut. Weaker labor market demand could slow wage growth and consumer spending. A pullback in spending may dampen inflationary pressures, supporting a more dovish Fed rate path.

US Markets Retreat as Trump Rolls Out Tariffs

US equity markets posted gains on Tuesday, February 4, as investors digested the latest tariff developments and corporate earnings. The Nasdaq Composite Index rose 1.35%, while the Dow and S&P 500 gained 0.30% and 0.72%, respectively.

US President Trump’s suspension of tariffs on Canada and Mexico eased concerns about widespread US tariffs. While tariffs on China became effective on February 4, markets considered Beijing’s retaliation restrained, calming fears about a full-blown US-China trade war.

Corporate earnings also contributed to the Nasdaq’s gains. Palantir Technologies surged 23.99% after reporting better-than-expected earnings and raising its 2025 guidance.

US Economic Calendar: Services and Labor Market in Focus

On Wednesday, February 5, traders must consider the ISM Services PMI and ADP employment change report.

Economists predict the ADP will report a 150k rise in employment in January, up from 122k in December. A higher reading could lower bets on an H1 2025 Fed rate cut, potentially weighing on risk assets. Conversely, a weaker number could further boost expectations of a Fed rate cut, driving demand for rate-sensitive stocks.

Additionally, economists forecast the ISM Services PMI to increase from 54.1 in December to 54.3 in January. A pickup in service sector activity, hiring, and prices would likely signal a more hawkish Fed policy stance. PMI trends will influence inflation and policy outlooks since the services sector accounts for 80% of the US economy.

However, an unexpected fall in the headline PMI, staffing levels, and input prices may support a more dovish Fed rate path.

Investors should also monitor tariff developments and FOMC members’ commentary for further monetary policy insights.

Near-Term Outlook

The DAX’s performance will depend on Services PMIs and key US economic indicators.

• Weaker Services PMI figures and softer US labor market data may drive the DAX toward 22,000.
• Stronger Services PMI and rising US employment could impact rate-sensitive German stocks, potentially pulling the Index toward 21,000.

External factors, including potential stimulus from Beijing and US tariffs, will influence DAX trends. Chinese stimulus could support German exports, while US tariffs may pose risks.

As of Wednesday morning, futures signaled a testy start.  DAX futures were down 93 points, while the Nasdaq 100 mini tumbled 132 points.

DAX Technical Indicators

Daily Chart

Despite US tariff developments, the DAX sits well above the 50-day and 200-day Exponential Moving Averages (EMAs), affirming bullish price signals.

A breakout from 21,500 would support a move toward the January 31 record high of 21,801. A return to 21,801 may enable the bulls to target the 22,000 level next.

Conversely, if the DAX drops below 21,500, it could signal a fall toward the key support level at 21,000.

With the 14-day Relative Strength Index (RSI) at 67.70, the DAX could climb to 21,801 before entering overbought territory (above 70 RSI).

Conclusion: Key Drivers to Watch

Traders should keep a close eye on the Services PMI numbers and US labor market data for ECB and Fed policy signals.

Additionally, external factors such as China’s economic policies and US trade measures could affect the DAX’s outlook.

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