DAX Rallies as President Trump Softens Tariff Stance
German equities extended Monday’s rally on Tuesday, April 15, after US President Trump softened his tariff stance, hinting at a pause on auto levies. Trump’s potential support for autos followed the tariff exemption on selected Chinese electronic goods.
The DAX rose 1.43%, building on Monday’s 2.85% rally, closing at 21,254. However, disappointing progress in US-EU trade talks capped the day’s gains.
Christophe Barraud, CEO of Market Securities Monaco SAM, commented on US-EU trade negotiations, saying:
“EU expects US tariffs to remain as talks make little progress.”
Citing media reports, Barraud added:
“The European Union and US made little progress in bridging trade differences, with US officials indicating that most US tariffs on the EU will not be removed. The EU has offered to remove all tariffs on industrial goods, including cars, but the US has rejected the proposal, and instead suggested that some tariffs could be offset by increasing investments and exports.”
Autos, Banks, Tech Stocks Get Tariff Boost
Recent tariff developments lifted demand for German-listed stocks. Autos and tech names rallied on renewed optimism, while the improved trade sentiment also benefited bank stocks.
- Auto sector: Continental AG rallied 2.71%, while Volkswagen and BMW rose 2.22% and 2.16%, respectively. Porsche, Mercedes-Benz Group, and Daimler Truck Holding also posted gains.
- Banking sector: Commerzbank and Deutsche Bank advanced 3.37% and 2.58%, respectively.
- Tech sector: SAP and Infineon Technologies rose 1.68% and 1.65%, respectively.
German Wholesale Inflation Reinforces ECB Rate Cut Bets
German wholesale prices increased 1.3% in March, down from 1.6% in February, signaling a softer inflation outlook. Wholesalers often reduce prices when demand weakens, passing cost savings on to customers, and leading to softer inflation. Monday’s data preceded Thursday’s ECB interest rate decision and press conference.
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Eurozone Inflation Takes Center Stage
Finalized Eurozone inflation figures will require consideration on Wednesday, April 16, as the ECB policy decision looms. According to preliminary data, the annual inflation rate softened to 2.2% in March, down from 2.3% in February. A downward revision, nearer to the ECB’s 2% target, could raise expectations of multiple ECB rate cuts. Conversely, a higher print could suggest a post-April pause on rate cuts.
US Markets Dip on Tariff and Economic Uncertainty
US equity markets slipped on Tuesday amid tariff uncertainty as investors awaited details of Trump’s national security tariffs, targeting semiconductors and electronics. The Nasdaq Composite Index dipped 0.05%, while the Dow and the S&P 500 fell 0.38% and 0.17%, respectively.
US economic data, including a larger-than-expected rise in the NY Empire State Manufacturing Index, had a muted impact on markets. Markets remained focused on trade risks and implications for global growth and central bank policy.
Will US Retail Sales Trigger Recession Fears?
On Wednesday, April 16, US retail sales data will give insights into the US economy, given private consumption contributes over 60% to US GDP. Economists expect retail sales to jump 1.3% month-on-month in March, up from a 0.2% rise in February.
A stronger-than-expected print would ease fears of a US recession, potentially boosting demand for risk assets. However, an unexpected fall in sales may fuel speculation about a US recession, potentially impacting risk sentiment.
Near-Term Outlook: DAX Sensitivity to Macro Risks
The DAX’s near-term trajectory hinges on tariff headlines, US retail sales data, and central bank signals.
Potential DAX Scenarios:
- Bullish Case: Easing trade tensions, softer Eurozone inflation, upbeat US retail sales, or dovish central bank commentary could drive the DAX toward 21,500.
- Bearish Case: Increasing trade tensions, higher Eurozone inflation, weak US data, or hawkish central bank commentary may pull the DAX toward 20,500.
As of Wednesday morning, the DAX futures were down 100 points, while the Nasdaq 100 mini dropped 291 points, on news of President Trump blocking the export of Nvidia’s (NVDA) H20 chips.
Technical Warning Signs Flash
Daily Chart:
After Tuesday’s rally, the DAX trades above the 200-day Exponential Moving Average (EMA) but remains below the 50-day EMA, suggesting a lack of short-term bullish momentum.
- Upside Target: A break above 20,500 could open the door to test the 50-day EMA, with 22,000 the next upside target.
- Downside risk: A drop below 21,000 could signal a fall toward the 200-day EMA, with 19,675 as the next key support level.
Conclusion: Monitor Macro Themes
Investors should closely follow trade headlines, key US and Eurozone data, and central bank commentary. These factors will likely influence near-term DAX trends.
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