Earnings Misses and Defense Stock Slump Break DAX’s Four-Day Rally
Signs of easing geopolitical tensions failed to extend the DAX’s rally as corporate earnings disappointed. The DAX slipped 0.12% on Friday, August 8, partially reversing Thursday’s 0.33% gain to close at 24,163.
On August 8, President Trump fueled hopes of an end to the Ukraine war, stating:
“The highly anticipated meeting between myself, as President of the United States of America, and President Vladimir Putin, of Russia, will take place next Friday, August 15, 2025, in the Great State of Alaska.”
Russia-Ukraine War News and Corporate Earnings
Munich Re Group tumbled 7.21% on August 8, dragging the DAX into negative territory. The insurer lowered its revenue outlook, impacting the broader sector. Hannover Re slid 3.97%.
Rheinmetall AG fell 1.25% on the news of the US and Russia working toward ending the Ukraine war.
Meanwhile, bank stocks extended their gains as upbeat earnings across the sector lifted sentiment. Commerzbank rallied 3.45%, while Deutsche Bank gained 1.59%. Auto stocks also advanced on easing concerns about tariffs impacting demand for German carmaker stocks. Volkswagen led the gains, rallying 2.27%.
Wall Street Advance as Markets Lock In Fed Rate Cut Bets
Economic indicators and Fed speakers fueled speculation about a September Fed rate cut, boosting demand for risk assets. The Nasdaq Composite Index rallied 0.98%, while the Dow and the S&P 500 gained 0.47% and 0.78%, respectively.
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See all DAX forecastsMeanwhile, expectations of a September Fed rate cut limited the DAX’s losses. President Trump nominated Stephen Miran to the Federal Reserve Board. Markets expect Miran to support Trump’s calls for interest rate cuts.
According to the CME FedWatch Board, the chances of a September Fed rate cut jumped from 80.3% on August 1 to 88.9% on August 8.
Fed in Focus as Labor Market Weakens
On Monday, August 11, the Fed will remain under the spotlight as investors await the crucial US CPI Report.
Fed chatter could influence sentiment toward the Fed rate path. Rising calls for a September rate cut and further cuts in Q4 could boost risk assets such as the DAX. Conversely, hawkish cues could weigh on sentiment.
Outlook: Key Catalysts for the DAX
The DAX’s near-term outlook hinges on geopolitical headlines, trade developments, and central bank commentary.
- Bullish Case: Progress toward ending the Ukraine war, easing trade friction, and dovish central bank rhetoric. These factors could drive the DAX toward the 24,500 resistance level.
- Bearish Case: Uncertainty about US-Russia talks, escalation in trade tensions, or hawkish central bank guidance. These scenarios may drag the DAX below 24,000, bringing the 50-day EMA into sight.
At the time of writing on August 11, the DAX futures advanced 63 points, while the Nasdaq 100 climbed 40 points. Easing geopolitical risks and a more dovish Fed rate path lifted risk sentiment.
DAX Technicals
Despite Friday’s loss, the DAX remains above the 50-day and 200-day EMAs, indicating a bullish bias.
- Upside Target: A breakout above the August 7 high of 24,392 could pave the way toward the 24,500 resistance level. A sustained move through 24,500 may allow the bulls to target the July 10 record high of 24,639.
- Downside risk: A drop below the 24,000 level would expose the 50-day EMA. If broken, the door could open for a test of the crucial 23,500 support level.
DAX Outlook Summary: Geopolitics and Central Bank Rhetoric
Traders should closely monitor Ukraine war headlines, trade news, and central bank rhetoric. Geopolitical updates and central bank guidance are likely to have a greater weight on the Index.
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.
