Dax Index News: Outlook Split as Ukraine Peace Hopes Clash with Inflation Risks

DAX Treads Water as US-Russia Talks on the Ukraine War Get Underway

The highly anticipated meeting between US President Trump and Russian President Vladimir Putin took center stage. The DAX slipped 0.07% on Friday, August 15, partially reversing Thursday’s 0.79% gain to close at 24,359.

Investor caution about the potential outcome of US-Russia talks tempered demand for German-listed defense stocks. Meanwhile, US economic indicators influenced risk appetite.

Defense Stocks Overshadow Auto Sector Gains Ahead of US-Russia Talks

Rheinmetall AG slid 1.22% on August 15, with a peace deal potentially impacting demand for military equipment. MTU Aero ended the session down 0.36%.

Meanwhile, auto stocks rallied with a peace agreement expected to benefit consumer-linked sectors. BMW rallied 1.46%, with Mercedes-Benz Group, Porsche, and Volkswagen also posting gains.

Eurozone Terms of Trade in the Spotlight

On Monday, August 18, investors brace for crucial Eurozone trade data, which could affect ongoing US-EU trade talks. Economists forecast the Eurozone trade surplus to widen from €16.2 billion in May to €17.5 billion in June. Rising Eurozone exports to the US and falling US exports to the Eurozone could face scrutiny following the recent US-EU trade deal.

Why does Eurozone trade data matter? Import and export trends will be key as analysts look for any impact of US tariffs on the Eurozone’s terms of trade. Rising US import prices may weaken demand for German goods, affecting corporate earnings and share prices.

While the data will require consideration, developments after the US-Russia talks on Friday are likely to carry greater weight. Ukrainian President Volodymyr Zelenskyy and European leaders will be in Washington today, discussing terms of a potential peace deal. Markets could be on edge.

Wall Street Mixed Amid Shifting Fed Rate Cut Expectations

US economic indicators continued to cloud the Fed’s monetary policy outlook. The Dow gained 0.08% on Friday, August 15, while the Nasdaq Composite Index and the S&P 500 fell 0.40% and 0.29%, respectively. Rising import prices and robust retail sales figures challenged expectations of multiple Fed rate cuts.

Import prices rose 0.4% month-on-month in July after falling 0.1% in June, signaling a potential pickup in consumer prices. Import prices have gained greater attention since the rollout of US tariffs. AMP Head of Investment Strategy and Chief Economist Shane Oliver remarked:

“If foreign suppliers/countries were absorbing the tariffs, US import prices would be falling… but they are not, suggesting that US companies and consumers are paying the tax!”

The upswing in import prices followed a surge in producer prices in July, also tempering expectations of aggressive Fed rate cuts. Producer prices rose 3.3% in July, following an increase of 2.4% in June.

US retail sales rose 0.5% month-on-month in July, following a 0.9% increase in June. Consumer spending may fuel demand-driven inflation, affecting the timeline for Fed policy easing.

Fed Speakers in Focus

On Monday, August 18, FOMC members’ reactions to last week’s economic indicators will influence risk assets such as the DAX.

Calls to delay further policy easing amid rising producer and import prices could weigh on the DAX. On the other hand, support for additional Fed rate cuts could boost sentiment.

On Friday, August 15, San Francisco Federal Reserve President Mary Daly reportedly supported a September rate cut and one additional cut in Q4, stating:

“What I don’t want to do is be so worried that inflation might come up again or be persistent that we wait for that clarity and don’t support the labor market.”

Outlook: Key Catalysts for the DAX

The DAX’s near-term outlook hinges on Ukraine war headlines, key economic data, and central bank monetary policy guidance.

• Bullish Case: Progress toward a Russia-Ukraine peace deal, upbeat Eurozone trade data, and dovish central bank cues. These factors could drive the DAX toward the 24,500 resistance level and the all-time high of 24,639.
• Bearish Case: Stalled talks, weak Eurozone data, or hawkish central bank signals. These scenarios may drag the DAX toward the crucial 24,000 support level.

At the time of writing on August 18, the DAX futures rose 25 points, while the Nasdaq 100 gained 55 points.

DAX Technicals

Despite Friday’s loss, the DAX remains above its 50-day and 200-day EMAs, signaling a bullish bias.

• Upside Target: A breakout above the 24,500 level could bring the all-time high of 24,639 into play. A sustained move through 24,639 may pave the way to the 25,000 level.
• Downside Risk: A break below 24,000 could enable the bears to target the 50-day EMA. If breached, 23,500 would be the next key support level.

DAX Outlook Summary: Geopolitics, US Data, and Central Bank Rhetoric

Traders should closely track updates from the meeting in Washington. Key economic data and central bank commentary will also influence sentiment. However, geopolitical developments and central bank cues are likely to have greater weight on the Index. Investors should brace for volatility if talks stall.

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.