DAX Rallies to New All-Time High Ahead of ECB Decision & Easing Tariff Woes
The ECB is widely expected to cut interest rates, the main factor driving the DAX rally.
- ECB to cut rates by 0.25%
- Forward guidance to indicate total 4 cuts in 2025
- Auto stocks jump as tariff war woes ease
The DAX rallied to a new all-time high today of 23,439 before retreating lower. Expectations on ECB policy driving the markets are now facing some profit taking just before the meeting.
ECB Rate Policy & New Government
Yesterday’s news that the CDU led coalition looking to form the next government agreed to a €500 billion fund for infrastructure.
The parties involved would overhaul strict borrowing rules to allow for the extra spending. The news filtered into today’s DAX rally.
The market has also been fueled by expectations of ECB policy through 2025. ECB policy is pushing the EUR/USD lower, marking German goods more competitive in international trade.
The extra revenue from expanding trade is seen to offset domestic economic concerns as well as trade tariffs.
Today’s ECB meeting is widely expected to produce a cut of 0.25%, and forward guidance is forecast to lay the grounds for rates as low as 2.0% by Q4 2025.
DAX Live Chart
DAX Automakers Get a Boost from Trump
Trump announced that automakers would have a 1-month moratorium from the 25% tariffs on Mexico and Canada.
Volkswagen and BMW jumped over 3% this morning, while Mercedes rallied 3.5%. All these automakers have large manufacturing plants in Mexico or Canada. And the companies are expected to move production to the US in exchange for the 1-month exemption.
The news has been a boost for auto stocks and also gives some reprieve from concerns about how far the tariff war could escalate.
Today’s largest gainer in the DAX is Deutsche Post, which announced a large number of job cuts. The news of a reduction in the workforce of 8,000 sent stocks higher by 9.3%.
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