Dax Index News: Will ECB and PMI Boost DAX? Trend Outlook and Tariff Risks Today

DAX Extends Losing Streak: Is a Rebound on the Cards?

The DAX extended its losses on Friday, March 21, amid rising geopolitical tensions and tariff uncertainties. The Ukraine war, rising Middle East tensions, and the threat of tariff-driven inflation overshadowed the German parliament’s fiscal reform vote.

Germany’s upper house passed the fiscal reform bill, effectively ending the debt brake and launching a €500 billion infrastructure fund to reboot the economy.

On Friday, March 21, the DAX fell 0.47%, adding to Thursday’s 1.24% loss to close at 22,892.

DAX Losers: Tech and Auto Sectors Drag

The auto and tech sectors remained under pressure over potential tariffs on autos, semiconductors, and pharmaceuticals.

• Tech Sector: Infineon Technologies slid by 2.81%
• Auto Sector: Daimler Truck Holding fell 2.48%, while Volkswagen and BMW dropped 1.31% and 0.88%, respectively. Mercedes-Benz Group and Porsche also posted losses.

Even sectors likely to benefit from the Reform Bill also struggled as the focus shifted to implementation challenges and spending timelines:

• Defense and Aerospace Sectors: Rheinmetall AG fell 2.23%, while Airbus and MTU Aero Engines declined by 0.43% and 1.33%.
• Construction Sector: Heidelberg Materials posted a 1.07% loss.

Germany Passes Historic Fiscal Reform Bill

The Bundesrat passed the fiscal reform bill on Friday, March 21, allowing the government to spend freely on defense and infrastructure. The €500 billion infrastructure fund aims to revive Germany’s struggling economy.

Despite the bill’s approval, concerns over labor shortages and bureaucratic delays could slow the potential benefits of the bill, weighing on German-listed stocks.

Commenting on the broader implications, Daniel Kral stated:

“A paradigm shift unfolding in Europe as both houses of German parliament vote to unlock large deficit spending – ending the era of German fiscal restraint, which has defined EU macro governance. Germany is now stepping up as a source of demand and European public goods. Historic.”

While domestic reforms offered long-term optimism, global uncertainties remained front and center.

Germany’s Private Sector in Focus

On Monday, March 24, private sector PMIs will influence sentiment toward the economy and the ECB rate path. Economists forecast Germany’s HCOB Manufacturing PMI to rise from 46.5 in February to 47.7 in March. Importantly, the HCOB Services PMI is expected to increase from 51.1 to 51.4 in March.

A milder contraction in manufacturing and stronger services activity could lift risk appetite.

However, the devil will be in the details. Labor market and price trends may show the early effects of Trump’s tariff policies. Rising prices could temper ECB rate cut bets, potentially pressuring German stocks. Weaker labor market conditions may dampen optimism over fiscal reforms.

Conversely, weaker-than-expected PMI figures may fuel ECB rate cut bets, supporting rate-sensitive stocks.

US Markets Advance on Tariff Relief

US equity markets reversed early losses on Friday, March 21, to end the week on a high. President Trump eased tariff concerns, stating that there will be ‘flexibility’ on reciprocal tariffs. The shift from a hard-line stance against countries imposing levies on US goods boosted demand for risk assets.

The Nasdaq Composite Index advanced 0.52%, while the Dow and the S&P 500 posted 0.08% gains.

Key Market Focus: US Services PMI Data and Tariffs

Upcoming services PMI data will give insights into the US inflation and labor market trends. Economists forecast the S&P Global Services PMI will rise from 51.0 in February to 51.2 in March.

A higher-than-expected PMI would ease recession fears, boosting demand for DAX-listed stocks. However, rising prices and tighter labor market conditions may temper June Fed rate cut bets, given that services inflation trends are crucial for underlying inflation.

Conversely, an unexpected drop below 50 would likely retrigger recession fears, fueling a flight to safety.

Traders should also monitor FOMC commentary on the economic impact of tariffs on inflation and further tariff developments.

Near-Term Outlook: Key Drivers

The DAX’s trajectory hinges on several key factors: PMI data, US-EU and US-China trade developments, and signals from the Fed.

Potential DAX Scenarios:

• Bullish Case: If trade tensions ease, private sector PMIs rise, and central banks support near-term rate cuts, the DAX could retarget its record high of 23,476.
• Bearish Case: If US-EU trade tensions escalate, PMI data weakens, or central banks adopt a more hawkish stance, the DAX could slide toward 22,500.

As of Monday morning, the DAX futures were up 89 points, while the Nasdaq 100 mini jumped 145 points, signaling a bullish start to the week.

DAX Technical Indicators

Daily Chart:

Despite a three-day losing streak, the DAX remains above the 50-day and 200-day Exponential Moving Averages (EMAs), suggesting strong bullish momentum. However, tariff and fiscal-driven volatility present potential short-term downside risks.

• Upside Target: A breakout above 23,000 could signal a move to 23,350. A return to 23,350 could bring Tuesday’s record high of 23,476 into sight.
• Downside risk: A DAX drop below 22,750 may test 22,500. A fall through 22,500 would bring the 50-day EMA into play.

With the RSI at 55.70, the DAX remains below overbought levels (above 70), signaling room for a climb above its all-time high of 23,476 toward 23,750.

Conclusion: Key Drivers to Watch

Traders should monitor:

• Private sector PMI data.
• US-EU and US-China trade tensions.
• Central bank commentary.
• Tariff developments.

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