Dax Index News: Bullish Forecast Hinges on Day 2 of US-China Trade Talks

Markets Eye Breakout as Rare Earth Tensions Shift Tone

The DAX slipped 0.16% to 24,137 in early trading on Tuesday, June 10, as investors considered US-China trade talks entering a second day. Market caution toward trade negotiations had weighed on demand for DAX-listed stocks on June 9. The DAX ended the June 9 session down 0.54% at 24,174.

The continuation of talks suggests that the US and China progressed toward a trade deal. However, trade talks could stall at any time, fueling market caution.

Before Monday’s negotiations, China reportedly approved licenses for rare earth mineral exports to US automakers. Economists believe this is a strategic move. Bob Elliott, Chief Investment Officer at Unlimited Funds, noted:

“The US is much more concerned about rare earth metals, a key leverage point within negotiations. While the outcome of today’s convo remains to be seen, there is little macroeconomic pressure for Chinese authorities to make a deal if it doesn’t suit their needs.”

Nonetheless, the risk of talks stalling could temper investor optimism as developments unfold.

Sector Performance

Sentiment toward US-China trade talks and China’s stance on rare earth mineral exports boosted demand for auto stocks. Mercedes-Benz Group gained 0.94%, while BMW, Porsche, and Volkswagen also posted early gains.

Meanwhile, Rheinmetall tumbled 3.59% as investors monitored Ukraine war developments.

Wall Street Avoids Losses as US-China Trade Talks Progress

US markets avoided losses on Monday, June 9. The Nasdaq Composite Index and S&P 500 posted modest gains of 0.31% and 0.09%, respectively, while the Dow ended flat.

Optimism over a trade deal lifted risk appetite, but expectations of a more cautious Fed limited further upside. As US-China trade negotiations proceed, markets will also focus on the upcoming US CPI Report on June 11, which follows Friday’s mixed Jobs Report. A hotter inflation print may refuel stagflation fears and dent sentiment.

Near-Term Outlook

The DAX’s near-term outlook hinges on US inflation data, trade developments, and ECB policy cues.

• Bearish Scenario: Rising US inflation, renewed trade tensions, or hawkish ECB rhetoric could push the index toward 23,750.
• Bullish Scenario: A US-China trade deal, dovish ECB cues, and easing US-EU trade tensions drive it toward 24,500.

DAX Technical Indicators

Daily Chart

Despite Monday’s loss, the DAX remains above the 50-day and 200-day Exponential Moving Averages (EMA), confirming a bullish trend.

A breakout above the June 4 record high of 24,346 would open the door to 24,500, with 24,750 as the next resistance level.

On the downside, a break below 24,000 may bring the 23,750 level into play, with 23,500 as the next major support level.

The 14-day Relative Strength Index (RSI) at 60.53 indicates the DAX could climb to 24,500 before entering overbought conditions (RSI > 70).

Final Thoughts

Volatility may build as investors consider updates from US-China trade talks, ECB chatter, and looming US inflation data. German stocks also remain highly sensitive to fiscal policy announcements.

Traders should stay attuned to technical and fundamental drivers and consult our economic calendar.