DAX Extends Winning Streak on Upbeat Earnings Amid Trade Jitters
The DAX surged ahead for a sixth straight session on Tuesday, April 29, rising 0.69% to 22,426, its highest close since April 1. Strong corporate earnings drove demand for DAX-listed stocks. However, ongoing trade uncertainties capped the session gains.
Defense and Bank Stocks Outperform
Investor sentiment improved as earnings topped expectations. German ammunition manufacturer Rheinmetall AG soared 8.51% after reporting a 46% surge in sales in Q1. Deutsche Bank jumped 5.04% after beating forecasts, while Commerzbank gained 3.98%.
In contrast, Porsche’s preferred share dropped 4.13% after issuing a profit warning, citing concerns about China, dragging the broader sector into the red.
Looking ahead, Airbus, Mercedes-Benz, and Volkswagen are scheduled to report on April 30, which may drive further market movement.
German Economic Data in Focus
On Wednesday, April 30, key economic data could give insights into the early effects of tariffs on the economy. Retail sales, labor market data, and preliminary Q1 GDP numbers require consideration.
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See all DAX forecastsA combination of weak retail sales, labor softness, easing inflation, and a GDP fall could increase pressure on the ECB to pivot more aggressively toward rate cuts. A more dovish rate stance could drive demand for German-listed stocks. However, fiscal stimulus developments remain a crucial factor.
Key forecasts:
- Retail sales: Expected to fall 0.4% in March (Feb: +0.8%).
- Unemployment rate: Steady at 6.3%.
- German GDP: Forecasted at +0.2% quarter-on-quarter in Q1 2025 (Q4 2024: -0.2%).
- German inflation: To ease to 2.0% in April (March: 2.2%).
US Markets Lifted by Fed Bets and Trade Hopes
US equity markets advanced on April 29. Trade developments and economic indicators boosted demand for risk assets globally, including DAX-listed stocks. The Nasdaq Composite Index rose 0.55%, while the Dow and the S&P 500 gained 0.75% and 0.58%, respectively, extending their winning streaks to six sessions.
The US CB Consumer Confidence Index tumbled to 86 in April, down from 93.9 in March. April’s slump suggests consumers may curb spending. Weaker spending may dampen inflation and impact the economy, supporting a more dovish Fed stance.
JOLTS job openings revealed cracks in the US labor market, also supporting Fed rate cuts. Job openings dropped to 7.192 million in March, down from 7.48 million in February. A weaker labor market may affect wage growth, consumer sentiment, and private consumption.
Trade developments added to the bullish tone. Howard Lutnick announced a first trade deal, while President Trump signaled progress with India.
US Labor Market, Inflation, and GDP in Focus
The focus now shifts to inflation, labor, and GDP data, which could influence the Fed rate path.
Softer data may bolster bets on multiple Fed rate cuts, while stronger numbers may temper Fed rate cut hopes.
Key US economic forecasts:
- Core PCE (YoY): 2.6% in April (Mar: 2.8%).
- Q1 GDP: Expected at +0.4% (Q4 2024: +2.4%).
- ADP Employment: +108k in April (Mar: +155k).
Beyond the data, trade developments will continue to influence risk sentiment. Easing US-EU tensions may send the DAX higher, while stalled talks could pressure shares of German firms reliant on US demand.
DAX Outlook: Macro and Central Banks in Play
The DAX’s near-term outlook depends on crucial economic indicators, central bank commentary, and trade headlines.
Potential DAX scenarios include:
- Bullish Case: Easing US-EU and US-China trade tensions, softer inflation and labor market data, or dovish central bank guidance could drive the DAX toward 22,750.
- Bearish Case: Rising trade tensions, higher inflation, and upbeat labor market data, or hawkish central bank rhetoric may pull the DAX toward 22,000.
As of Wednesday morning, the DAX futures were up 36 points, while the Nasdaq 100 mini dropped 113 points, indicating a choppy session ahead.
Technical Setup: Cautious Optimism
According to the daily chart, the DAX remains above the 50-day and the 200-day Exponential Moving Averages (EMA), affirming underlying bullish momentum.
- Upside Target: A break above the April high of 22,500 could support a move toward 22,750. A decisive breakout may bring 23,000 into view.
- Downside risk: A move below 22,350 may trigger a pullback toward 22,000 and the 50-day EMA.
Conclusion: Monitor Macro Themes
DAX traders should monitor upcoming inflation, labor market data releases, European Central Bank guidance, earnings, and trade headlines. These factors will likely dictate sentiment and market direction in the near term.
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