Dax Index News: Trade Tensions and Bundestag Vote Influence DAX Outlook and Forecast

DAX Opens Higher as Bundestag Vote Looms

Germany’s coalition government is in the spotlight on Tuesday, March 18, as Parliament is set to vote on key fiscal measures aimed at reviving the German economy. Optimism surrounding the vote and its potential impact on GDP growth mitigated tariff jitters, fueling demand for German-listed stocks.

The DAX Index opened higher on Tuesday, March 18, rising 0.42% to 23,251.

Sector Performance:

Expectations that the Bundestag will pass legislation to effectively end Germany’s debt brake and approve a €500 billion infrastructure fund and a €100 billion climate and economic transformation fund fueled demand for banks, construction, and defense stocks.

Rheinmetall AG rose 0.24%, while Heidelberg Materials AG advanced by 0.58%. Aerospace stocks Airbus and MTU Aero Engines posted gains of 0.56% and 0.49%, respectively.

Commerzbank and Deutsche Bank also benefited from the prospect of fiscal stimulus, climbing 1.37% and 1.23%.

Meanwhile, auto stocks also advanced on Trump’s recent silence on tariffs. BMW and Porsche rose 1.36% and 1.57%, respectively. Volkswagen and Mercedes-Benz Group also posted early gains.

Eurozone Trade Terms in Focus

Eurozone trade data, set for release on March 18, could draw scrutiny from US President Trump. Economists forecast the Eurozone’s trade surplus to narrow from €15.5 billion in December to €14.1 billion in January.

While a narrowing could signal weakening demand, investors should consider import and export trends. A widening Eurozone-US trade surplus could heighten the risk of US tariffs targeting EU goods.

Last week, President Trump threatened 200% tariffs on EU wine and spirits after the EU introduced a 50% levy on US whiskey.

Despite the increasing focus on US terms, the Bundestag vote remains the primary market-moving event for the EU.

What the Polls Say

Oliver Rakau, Chief German Economist and ECB Commentator at Oxford Economics conducted a poll on X (formerly Twitter), asking whether Germany’s fiscal splurge will pass the Bundestag and Bundesrat:

• Yes, for sure: 37.4%.
• Probably yes: 55.4%.
• Probably no: 4.3%.
• No way: 2.9%.

The results highlight investor optimism toward the vote and its potential to drive demand for German-listed stocks.

US Market Recap: US Retail Sales Ease Recession Fears

On Monday, March 18, US equity markets posted gains, consolidating the March 14 relief rally. Progress toward ending the Ukraine war and US economic data bolstered demand for risk assets.

The Dow and the S&P 500 rose 0.85% and 0.64%, respectively, while the Nasdaq Composite Index gained 0.31%.

US retail sales increased by a modest 0.2% month-on-month (MoM) in February after tumbling 1.2% in January. The softer-than-expected rise in retail sales supported expectations of a more dovish Fed rate path.

Meanwhile, the retail sales control group—which excludes volatile components such as car sales, building materials, and gas stations—jumped by 1%, reversing January’s 1% drop. The February rebound eased recession concerns.

US Housing and Manufacturing Sectors in Focus

On March 18, US manufacturing and housing sector figures require consideration.

Economists forecast industrial production to rise 0.2% MoM in February after a 0.5% increase in January. An unexpected fall may retrigger recession fears, weighing on risk sentiment. However, a stronger industrial production reading may signal economic resilience, boosting demand for stocks.

Turning to the housing sector, economists expect housing starts and building permits to fall in February, following sharp declines in January. Weaker-than-expected numbers could signal softer GDP growth as economists consider the housing market a barometer for the US economy. In this scenario, risk assets could face selling pressure. Conversely, a rebound in building permits and housing starts may ease recession jitters, boosting demand for risk assets.

Beyond economic data, traders should also monitor tariff developments, which could influence short-term market trends.

Near-Term Outlook

The DAX’s trajectory will depend on central bank policies, tariff developments, and fiscal policy progress:

• Bearish Scenario: Rising US-EU trade tensions, a Bundestag vote against fiscal reforms, and a hawkish Fed could push the DAX toward 22,500.
• Bullish Scenario: A dovish Fed stance, easing trade tensions, and German parliamentary approval of fiscal reforms could drive the DAX past its record high of 23,476.

As of Tuesday morning, US futures pointed to a challenging Tuesday session, with the Nasdaq 100 mini down 72 points.

DAX Technical Indicators

Daily Chart

After Monday’s gains, the DAX sits well above the 50-day and 200-day Exponential Moving Averages (EMAs), signaling strong bullish momentum. However, fiscal and tariff-driven volatility raises short-term downside risks.

If the DAX returns to 23,350, the bulls could target the record high of 23,476. A break above 23,476 may signal a move toward 23,750.

Conversely, a DAX drop below 23,000 could bring 22,750 into sight. A fall through 22,750 may enable the bears to target 22,000 and possibly the 50-day EMA.

The 14-day Relative Strength Index (RSI) at 60.19 indicates the DAX may climb to the March 6 record high of 23,476 before entering overbought territory (RSI > 70).

Final Thoughts

Tariffs, central bank policies, and Germany’s fiscal goals remain the dominant market forces. Key areas for traders to watch include:

• US-EU trade relations and tariff developments.
• ECB and Fed forward guidance on interest rates.
• German Parliament’s vote on the fiscal package and debt rules.
• US manufacturing and housing sector data.

With elevated market volatility, staying ahead of policy changes and technical signals will be essential for identifying trading opportunities. View our latest reports here.