Market optimism about a US-EU trade deal boosted demand for DAX-listed stocks. The DAX Index gained 0.55% on Tuesday, July 8, extending Monday’s 1.2% rally and closing at 24,074.
Optimism surrounding a US-EU trade deal underpinned gains in DAX-listed stocks. President Trump gave a glowing update on trade talks, reportedly stating,
“The European Union has been speaking to us, Ursula, and the whole group, and they have been very nice.”
Progress toward a trade deal offset weaker-than-expected trade data from Germany. German exports fell 1.4% month-on-month in May, following a 1.7% drop in April as exports to the US plunged 7.7%. German imports slid 3.8% vs. a 3.9% rise in April, signaling weakening demand as pre-tariff front-loading continued to reverse.
Easing fears of Liberation Day tariffs on the EU boosted demand for bank stocks. Commerzbank led the gains, soaring 4.75%, while Deutsche Bank gained 0.62%.
Auto stocks also advanced on expectations of a US-EU trade deal. BMW and Mercedes-Benz Group rallied 2.25% and 1.98%, respectively. Volkswagen and Porsche also posted gains.
However, potential disagreements from within the EU on the terms of a trade deal capped the gains.
US markets posted mixed performances on Tuesday, July 8, as investors reacted to Trump’s tariff moves. The Dow and the S&P 500 dropped 0.37% and 0.07%, respectively, while the Nasdaq Composite Index gained 0.03%.
Trump announced a 50% tariff on copper imports, triggering a 9.94% surge in copper prices. Prices climbed further in early trading on Wednesday, July 9, rising 3.62%. The US President also warned of potential tariffs on pharmaceuticals and semiconductors.
The overnight news could influence US-EU trade negotiations, especially if Trump intends to use specific tariffs to influence US-EU trade terms.
Later in the July 9 session, investors should monitor Fed commentary on tariffs and monetary policy. Support for rate cuts based on easing concerns about tariffs fueling inflation could lift sentiment. Conversely, rising concerns about Trump’s latest tariff announcements and a potential pickup in inflation may impact risk assets such as the DAX.
The DAX’s near-term outlook hinges on US-EU trade news and central bank guidance.
At the time of writing on July 9, the DAX futures rose 29 points, while the Nasdaq 100 was down 23 points. Futures markets signaled a choppy start to the mid-week session.
After a bullish start to the week, the DAX trades well above the 50-day and 200-day Exponential Moving Averages (EMA), signaling bullish momentum.
The 14-day Relative Strength Index (RSI), at 59.56, suggests the DAX could climb to 24,479 before entering overbought territory (RSI > 70).
Traders should closely monitor US-EU trade talks and central bank commentary. The threat of Liberation Day tariffs would likely weigh on the DAX. Conversely, progress toward a trade deal could drive demand for DAX-listed stocks. Trade developments will have greater weight than central bank chatter.
Explore our exclusive forecasts to assess whether improving trade sentiment could lift the DAX to new highs. Refer to our latest forecasts and macro insights here for further analysis, and consult our economic calendar.
With over 28 years of experience in the financial industry, Bob has worked with various global rating agencies and multinational banks. Currently he is covering currencies, commodities, alternative asset classes and global equities, focusing mostly on European and Asian markets.