DAX Gets US Jobs Report Boost as Trade Talks Continue
DAX rides risk rally as US Jobs Report surprises and EU trade deal looms. The DAX climbed 0.61% on Thursday, July 3, following Wednesday’s 0.49% gain and closing at 23,934.
The US Jobs Report signaled a resilient labor market, easing recession fears. Nonfarm payrolls rose 147k in June vs. a 110k estimate. The unemployment rate fell from 4.2% to 4.1% though the drop was partially due to a lower participation rate.
While the numbers were upbeat, wage growth slowed, which could affect consumer spending and dampen inflationary pressures. Nevertheless, the Jobs Report sank bets on a Fed rate cut. This capped the DAX’s gains.
According to the CME FedWatch Tool, the chances of a September Fed rate cut fell from 93.7% on July 2 to 67% on July 3.
Meanwhile, hopes of a US-EU trade deal contributed to the session gains. EU trade chief Maros Sefcovic reportedly met with the US administration, aiming to avoid 50% tariffs from July 9. Current US tariffs include 25% levies on autos, 50% on steel and aluminum, and sweeping 10% tariffs.
Sector Snapshot: Bank and Tech Stocks Outperform
Easing fears of a US recession and progress toward US trade deals with the EU and other key economies boosted demand for bank stocks. Commerzbank led the gains, rallying 2.44%, while Deutsche Bank closed up 0.95%.
Hopes of a trade deal fueled demand for tech stocks. SAP and Infineon Technologies climbed 2.02% and 1.96%, respectively.
However, auto stocks had a mixed session. Porsche and Volkswagen posted modest gains, while BMW and Mercedes-Benz Group closed in the red.
DAX Price Forecast
Every new DAX analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all DAX forecastsGerman Factory Orders in Focus
On Friday, July 4, factory orders from Germany require consideration as US-EU trade talks continue. Economists expect factory orders to drop 0.1% month-on-month in May after rising 0.6% in April.
A sharper decline may pressure the DAX in early trading, though any lasting effects on sentiment would likely hinge on trade developments. On the other hand, another pickup in orders would signal robust demand, lifting sentiment.
While the May data may influence sentiment, US-EU trade news will be crucial. More favorable tariffs and an end to the threat of tariff hikes could boost demand for German goods, triggering a market rally.
Wall Street Nasdaq and S&P 500 Close at Record Highs
US markets posted gains on July 3 as labor market data lifted sentiment. The Nasdaq Composite Index and the S&P 500 rallied 1.02% and 0.83%, respectively, while the Dow rose 0.77%.
Investors reacted positively to the US Jobs Report despite the numbers impacting Fed rate cut bets. However, there were some signs of weakness in the data.
Fred Ducrozet, Head of Macroeconomic Research at Pictet Wealth Management, remarked:
“Direction of travel should be clear though, with private sector hiring slowing significantly, weaker wage growth, lower participation rate and hours worked.”
Fed Speakers in the Spotlight
Later in the July 4 session, investors should monitor Fed speakers for reactions to the US Jobs Report.
Outlook: Key Catalysts for the DAX
The DAX’s near-term outlook hinges on US-EU trade headlines and central bank commentary.
- Bullish Case: A US-EU trade deal and dovish central bank cues could send the DAX toward 24,479.
- Bearish Case: Failed US-EU trade talks or hawkish central bank signals may push the DAX toward the 50-day EMA. A drop below the 50-day EMA could bring the 23,000 support level into play.
At the time of writing on July 4, the DAX futures dropped 35 points, while the Nasdaq 100 was down 51 points. Futures markets signaled a testy end to the week.
DAX Technicals
Despite a choppy week, the DAX remains above the 50-day and 200-day Exponential Moving Averages (EMA), signaling bullish momentum.
- Upside Target: A breakout above 24,000 could signal a move toward the June 30 high of 24,121. A sustained move through 24,121 may pave the way to the June 5 high of 24,479.
- Downside risk: A drop below 23,500 and the 50-day EMA could expose the crucial 23,000 support level.
The 14-day Relative Strength Index (RSI), at 55.44, suggests the DAX could rise to 24,479 before entering overbought territory (RSI > 70).
Labor Market Data, Trade Developments, and Central Bank Signals
Traders should closely monitor US-EU trade talks and central bank commentary. Renewed US-EU trade tensions could weigh on sentiment and influence central bank guidance.
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.
