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Dax Index News: Will Tariff Threats and Fed Bets Push DAX Below 19,000?
By:
Key Points:
- DAX falls 0.56% as Trump’s tariff threats spark uncertainty; German auto stocks lead the decline, led by Daimler’s 6% drop.
- German consumer sentiment forecast to dip further amid tariff fears and weak Eurozone economic activity.
- US Personal Income and Outlays Report to shape DAX trends; inflation and spending trends may signal Fed rate path shifts.
In this article:
DAX Retreats on Trump Tariff Jitters
The DAX declined by 0.56% on Tuesday, November 26, reversing a 0.43% gain from Monday, November 25, closing at 19,296.
US tariff threats on Canada, China, and Mexico weighed on market sentiment, dampening optimism for export-driven economies. While Trump did not mention EU tariffs, the President-elect’s previous comments about tariffs on EU goods remained a DAX headwind.
Auto Stocks Hit the Reverse Amid Tariff Threats
German auto stocks reversed gains from the Monday session as investors considered the potential impact of US tariffs on the auto sector. Daimler Truck Holding tumbled 6.01%, while Volkswagen and Porsche saw declines of 2.38% and 2.00%, respectively. BMW and Mercedes Benz Group also struggled. The EU’s auto sector will likely be high on Trump’s tariff list.
German Consumer Confidence in Focus
On Wednesday, November 27, investors should consider Germany’s GfK Consumer Sentiment Indicator. Economists forecast the GfK Consumer Confidence Indicator to fall slightly, from -18.3 for December to -18.6 for December.
The threat of US tariffs on EU goods, the recent slump in Euro area services sector activity, and concerns about global demand may contribute to a gloomier outlook. Nevertheless, hopes for aggressive ECB rate cuts (50bps) could limit the downside.
US Consumer Confidence Signals Positive Spending
On Tuesday, the CB Consumer Confidence Index drew interest, rising from 109.6 in October to 111.7 in November, potentially signaling higher spending. Higher spending may fuel demand-driven inflation, potentially creating a less dovish Fed rate path. Respondents cited improving labor market conditions, which is critical for wage growth and consumption trends.
FOMC Meeting Minutes Deliver Late Boost
The FOMC Meeting Minutes revealed a divided Committee on the Fed rate path. Economists took the minutes as a potential signal for gradual Fed rate cuts in December 2024 and 2025.
US Equity Markets Advance on Fed Bets and Easing Geopolitical Risk
On Tuesday, November 26, US equity markets continued their advance. The Nasdaq Composite Index gained 0.63%, the S&P 500 rose 0.57%, while the Dow climbed 0.28%.
Significantly, the Dow and the S&P500 climbed to all-time highs. Investors reacted positively to news of Israel and Lebanon’s Hezbollah reaching a ceasefire agreement. The FOMC Meeting Minutes contributed to the gains.
US Personal Income and Outlays Report Puts the Fed in Focus
In Wednesday’s US session, the crucial US Personal Income and Outlays Report could impact risk sentiment. Economists expect the Core PCE Price Index to increase by 2.8% year-on-year in October, up from 2.7% in September.
Higher inflation could lower bets on a December Fed rate cut, potentially impacting demand for riskier assets. Beyond the inflation figures, investors should also consider personal income and spending trends.
Lower US inflation and weaker personal income and spending could drive the DAX toward its all-time high of 19,675. Conversely, higher inflation and upward trends in income/spending may drag the DAX below 19,000 on lower Fed rate cut bets.
Other US economic data for Wednesday include US GDP, durable goods orders, and jobless claims. However, unless there is a spike in jobless claims, the Personal Income and Outlays Report will take center stage.
Near-Term Outlook
In the near term, DAX movements will hinge on US Tariff news, economic data, and central bank commentary. Softer US inflation, a pullback in German consumer sentiment, and a dovish ECB rate path may drive the DAX toward its all-time high of 19,675. Conversely, the DAX may break below 19,000 on a hotter Personal Income and Outlays Report and a less dovish ECB rate path.
As of Wednesday morning, futures signaled a negative start to the session. DAX futures were down 20 points, while the Nasdaq mini futures fell 15 points.
Investors should closely monitor economic data releases, central bank commentary, and US tariff chatter for potential trading opportunities in the DAX.
DAX Technical Indicators
Daily Chart
Despite Tuesday’s retreat, the DAX remains above the 50-day and 200-day EMAs, sending bullish price signals.
A DAX breakout from 19,350 could signal a return to 19,500. Furthermore, a break above 19,500 may bring the all-time high of 19,675 into play.
US economic indicators, German consumer sentiment trends, US tariff-related news, and central bank commentary will influence DAX trends.
Conversely, a DAX break below the 50-day EMA could enable the bears to target 19,000. A fall below 19,000 may bring 18,750 into play.
With the 14-day RSI at 52.12, the DAX could climb above the 19,675 all-time high before entering overbought territory.
About the Author
Bob Masonauthor
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.
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