Dax Index News: Inflation, Tariffs, and Trade Set the Stage for DAX Today

DAX Gets Central Bank Rate Cut Boost

Fed Chair Powell’s testimonies from Capitol Hill resonated as investors raised bets on a Q3 Fed rate cut. On Thursday, June 26, the DAX advanced 0.64%, reversing Wednesday’s 0.61% loss to close at 23,649.

Delivering testimony on Capitol Hill, Fed Chair Powell intimated that the Fed would have considered rate cuts earlier if tariffs had not complicated the inflation outlook. The potential for a new and more dovish Fed Chair, which would align with Trump’s push for lower rates, also lifted the prospect of a lower interest rate environment.

Meanwhile, a US-EU trade deal hung in the balance as President Trump’s July 9 tariff deadline loomed, capping the gains. While German Chancellor Friedrich Merz called for a swift trade deal, French President Emanuel Macron said he would not support an imbalanced deal.

Sector Performance: Defense Stocks Soar

German automotive and arms manufacturer Rheinmetall led the gains, surging 7.28% after NATO leaders supported a ramp-up in defense spending on June 25. Airbus and MTU Aero benefited from the news, advancing 2.56% and 0.16%, respectively.

Meanwhile, auto stocks capped the session gains. Volkswagen and Mercedes-Benz Group dropped 1.50% and 1.44%, respectively, while Porsche fell 1.31%. Uncertainty about a US-EU trade deal and waning consumer sentiment pressured the auto sector.

Germany’s GfK Consumer Confidence Indicator dropped from -20 for June to -20.3 for July. An increased willingness to save signaled a potential pullback in spending despite improving income expectations.

Wall Street Climbs as US Economic Indicators Boost Fed Rate Cut Bets

US markets posted gains on June 26, with US economic data boosting bets on a Q3 Fed rate cut. The Nasdaq Composite Index and the Dow gained 0.97% and 0.94%, respectively, while the S&P 500 rose 0.8%.

The US economy contracted 0.5% quarter-on-quarter (QoQ) in Q1, revised from a preliminary 0.2% contraction. Thursday’s GDP data added to economic uncertainty and prompted Fed speakers to signal support for further monetary policy easing.

This week, the Fed’s Mary Daly, Susan Collins, Michelle Bowman, and Austan Goolsbee fueled speculation about rate cuts. According to the CME FedWatch Tool, the chances of a September rate cut have risen from 64% on June 18 to 93.9% on June 26.

US Personal Income and Outlays Report to Drive Fed Sentiment

Later in the June 27 session, the Personal Income and Outlays Report will influence the Fed rate path and risk sentiment. Economists forecast the US Core PCE Price Index to rise 2.6% year-on-year in May, up from 2.5% in April.

A sharper increase may reverse bets on a Q3 Fed rate cut and pressure risk assets, including DAX-listed stocks. Conversely, softer inflation may cement bets on a September move, lifting risk sentiment.

Beyond the headline data, personal income and spending trends also need consideration. Softer income and spending may dampen inflationary pressures, supporting a more dovish Fed stance.

With crucial inflation data in focus, investors should closely monitor the Fed’s reaction to the numbers.

Outlook: Key Catalysts for the DAX

The DAX’s near-term outlook depends on US inflation data, trade developments, Iran and Israel upholding the ceasefire, and central bank guidance.

• Bullish Case: A US-EU trade deal, easing Middle East tensions, softer US inflation, and dovish central bank signals could send the DAX toward 24,000.
• Bearish Case: Breach of the Iran-Israel ceasefire, stalled US-EU trade talks, hotter US inflation, or hawkish central bank cues may push the DAX below the 50-day EMA.

At the time of writing on June 27, the DAX futures jumped 126 points, while the Nasdaq 100 was up 35 points. The Futures markets signaled a positive end to the week.

Technical Setup Suggests Cautious Optimism

After Thursday’s recovery, the DAX trades above the 50-day and 200-day Exponential Moving Averages (EMA), signaling bullish momentum.

• Upside Target: A breakout above 23,750 could pave the way to 24,000. Sustained buying pressure may bring the June 5 high of 24,479 into play.
• Downside risk: A break below the 50-day EMA may expose the crucial 23,000 support level.

The 14-day Relative Strength Index (RSI), at 51.40, indicates the DAX could rise to 24,479 before entering overbought territory (RSI > 70).

US Data, Tariffs, and Central Banks

Traders should closely monitor developments in the Middle East, US-EU trade negotiations, key US data, and central bank rhetoric. Renewed Iran-Israel disputes and stalled US-EU trade talks could pressure sentiment, overshadowing economic data and central bank cues.

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.