Dax Index News: Forecast Brightens as Trade Talks and US Data Lift DAX Outlook

DAX Targets Nine Day Winning Streak and Fresh Highs on Trade News

The DAX surged to a five-week high on Friday, May 2, rallying 2.62% to close the week at 23,087. An eight-day winning streak drove the DAX within striking distance of its record high of 23,476 on US-China trade developments.

Reports of China considering a return to trade negotiations raised hopes of a resolution to the US-China trade war and the potential for a US-EU trade deal. Notably, the DAX recovered all losses incurred since Liberation Day. Positive US labor market data further boosted sentiment.

Tech Stocks Shine Amid Trade Optimism

Siemens Energy AG surged 7.49%, while Infineon Technologies and SAP rallied 3.93% and 4.31%, respectively, amid easing trade tensions that lifted investor confidence. Airbus jumped 5.33% after beating earnings estimates, sending MTU Aero 4.97% higher.

In the auto sector, Porsche led gains with a 1.63% advance, helping offset earlier losses.

Eurozone Inflation Climbs But Fails to Dent Risk Sentiment

Eurozone core inflation rose from 2.4% in March to 2.7% in April, challenging expectations of aggressive ECB rate cuts. Despite the uptick, investors bet the ECB will prioritize growth concerns over inflation risks.

US Jobs Report Lifts Sentiment Further

The US Jobs Report drove the DAX to a session high. Nonfarm payrolls increased by 177k in April, down slightly from 185k in March. Average hourly earnings rose 3.8% year-on-year, mirroring March’s increase, while the unemployment rate remained unchanged at 4.2%. Despite job growth slowing marginally, the pace remained healthy, easing recession concerns.

US Markets Rally on Labor Data and Trade News

Wall Street extended gains on May 2 buoyed by the US Jobs Report and positive trade headlines. The Nasdaq Composite Index rallied 1.51%, while the Dow and the S&P 500 gained 1.47% and 1.39%, respectively, marking a nine-day winning streak.

US Services PMI in Focus

Market focus now turns to the US services sector, with the ISM Services PMI due Monday, May 5. Economists forecast the ISM Services PMI to slip from 50.8 in March to 50.6 in April. Since the services sector contributes around 80% to the US GDP, April’s report will provide key insights into early Q2 2025 economic momentum.

A drop below the 50 neutral level may revive recession fears, impacting risk assets, including the DAX. Conversely, a higher PMI reading could signal a pickup in economic activity, lifting risk assets.

DAX Outlook: Trade, Economic Data, and Central Banks in Focus

The DAX’s near-term outlook hinges on key economic indicators, the upcoming FOMC press conference, and trade developments.

• Bullish Case: A resumption of US-China trade talks, upbeat economic data, and a dovish FOMC press conference (May 7) could send the DAX above 23,476.
• Bearish Case: An escalation in trade tensions, renewed fears of a US recession, or hawkish central bank guidance may drag the DAX toward 22,500.

As of Monday morning, the DAX futures dropped 49 points, while the Nasdaq 100 mini fell 164 points, indicating a negative start to the session.

Technical Setup: Cautious Optimism

According to the daily chart, the DAX trades well above the 50-day and the 200-day Exponential Moving Averages (EMA), signaling continued bullish momentum.

• Upside Target: A break above 23,150 could bring the record high of 23,476 into play. A decisive breakout may pave the way to 23,750.
• Downside risk: A break below 23,000 could open the door to 22,750. If selling pressure intensifies, the 50-day EMA would be the next key support level.

The 14-day Relative Strength Index (RSI) at 64.60 suggests the DAX could climb toward the record high of 23,476 before entering overbought territory (RSI > 70).

Conclusion: Monitor Macro Themes and Trade News

DAX traders should monitor trade headlines, US services sector data, ECB commentary, and earnings. These factors will likely influence market direction ahead of the FOMC interest rate decision and press conference.

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