Dax Index News: Consumer Sentiment and Tariff Risks to Influence Market Outlook

DAX Dips Amid US-China Tensions and German Fiscal Uncertainty

Rising tensions between the US and China kept DAX investors on edge after Trump’s national security memorandum targeting China’s AI advancements. Meanwhile, investors awaited post-election updates on Germany’s fiscal policy goals and spending plans.

The DAX slipped by 0.07% on Tuesday, February 25, partially reversing Monday’s 0.62% gain to close at 22,410.

Sector Highlights: AI-Linked Stocks Tumble While Auto Stocks Shine

Auto and tech stocks diverged on February 25, leaving the DAX Index with modest losses.

• AI-linked Siemens Energy tumbled 7.34%, while Infineon Technologies fell 2.63% amid a broad-based tech sector sell-off.
• Heidelberg Materials rallied 3.58% after announcing expectations of upbeat operating profits.
• Volkswagen led auto sector gains, climbing 3.54%.

German Economy Contracts in Q4

The German economy contracted by 0.2% in Q4 2024, reversing growth of 0.1% in Q3 2024. Exports, manufacturing production, and investment weighed, while private consumption provided some support.

While the finalized GDP figures aligned with preliminary estimates, Oxford Economics Chief German Economist Oliver Rakau questioned their accuracy:

“The German Q4 GDP data looks dodgy. Inventories added 0.8ppts to q/q growth just like in Q3, which is huge and totally at odds with surveys. At least the GDP composition looks due for a revision.”

German Consumer Sentiment and DAX Outlook

On Wednesday, February 26, Germany’s GfK Consumer Confidence Index will draw interest. Economists expect the Index to rise slightly from -22.4 for February to -21.4 for March. A higher reading could signal a pickup in consumer spending, bolstering the German economy and boosting demand for German stocks.

However, the data for March is unlikely to alter the ECB’s rate path. Instead, investor focus will remain on German fiscal policy, tariffs, and inflation trends.

US Consumer Confidence Declines Sharply, Boosting Rate Cut Bets

In the US, consumer confidence fell sharply in February, raising expectations of multiple 2025 Fed rate cuts. The US CB Consumer Confidence Index fell from 105.3 in January to 98.3 in February, down from a preliminary 102.5.

The drop below 100 suggests consumers turned cautious, potentially easing demand-driven inflationary pressures. Consumers flagged concerns about US tariffs and policies, driving pessimism about future job prospects.

Concerns about the US economy overshadowed expectations of a less hawkish Fed, pressuring the DAX.

US Markets Mixed Amid Economic Uncertainties

US equity markets had a mixed session on Tuesday, February 25, amid rising concerns about the US economy. The Nasdaq Composite Index and the S&P 500 fell 1.35% and 0.47%, respectively, while the Dow rose 0.37%.

In the bond markets, 10-year US Treasury yields dropped for the fifth consecutive session, falling to a February 25 low of 4.285%. The pullback in yields reflected growing concerns about the US economy.

Key Focus: US Housing Market and Fed Commentary

On February 26, new home sales data will give investors insights into the US economy. Economists expect new home sales to slide 2.6% in January after rising 3.6% in December.

A sharper-than-expected decline could suggest deteriorating housing market conditions, potentially pressuring house prices.

With economists considering the housing market a barometer of the US economy, weakening demand for homes could indicate uncertainty about the labor market and signal a more dovish Fed rate path.

An unexpected rise in sales may temper bets on a Fed rate cut, potentially weighing on risk sentiment.

Beyond the data, Fed speakers and US tariff developments remain key drivers for sentiment.

Near-Term Outlook

The DAX’s near-term direction hinges on:

• German fiscal policy: Progress on a defense fund and stimulus measures could support the Index.
• US-China tariff risks – Escalating trade tensions may pressure global equities.
• Central bank policy – Dovish ECB or Fed signals could boost risk appetite.

Progress toward a sizeable defense fund, rising tariff risks, and more dovish central bank guidance could drive the DAX toward 22,750.

However, resistance to loosening Germany’s debt break, rising trade war risks, and hawkish central bank policy stances may drag the Index toward 22,000.

As of Wednesday morning, the DAX mini was up 138 points, while the Nasdaq 100 mini gained 106 points, signaling a positive start to the Wednesday session.

DAX Technical Indicators

Daily Chart:

After this week’s early gains, the DAX remains well above the 50-day and 200-day Exponential Moving Averages (EMAs). While holding above key moving averages, increasing volatility indicates potential short-term downside risks within the broader uptrend.

A breakout from 22,500 could support a move toward the February 19 record high of 22,935 into sight. A return to 22,935 may enable the bulls to target 23,000 next.

Conversely, if the DAX breaks below 22,350, 22,000 will be the next key support level.

With the RSI at 64.17, the DAX remains below overbought levels (above 70), potentially allowing further upside toward the 22,935 high.

Conclusion: Key Drivers to Watch

Traders should closely monitor:

• German government’s fiscal policy updates.
• ECB and Fed commentary.
• US-EU and US-China Tariff developments.

Further detailed analysis of global market influences on the DAX is available here.