DAX Attempts Recovery on Hopes of Reduced Trump Tariffs
Trump hinted at flexibility on tariffs, raising hopes that a trade war may be averted.
- Trump hints at less drastic measures
- Stock market still weary of outcome
- German PMI data shows mixed results
The DAX got off to a good start this morning, rallying 0.60% before retracing lower. Global stock markets got some relief from Trump’s comments, but investors may not fully hope for a complete turnaround.
Tariff Risk and peace Deal
Trump’s comments gave rise to hopes that a trade war may be deterred or not as messy as initially thought. However, many investors are shy of putting their hopes on the US president’s recent comments.
As for now, trade tariffs will take effect, especially on what Treasury Secretary Bessent calls the dirty 15. That is to say the top 15% of countries with the highest tariffs and trade volumes.
I agree with the skeptical investors, trade tariffs are unlikely to go away, unless the countries imposing them slash them completely.
The war in Ukraine, or rather the hope for a peace deal, gave the DAX a boost when it seemed Zelenskyy was open to negotiation.
However, recent comments demanding troops on the ground from the Ukrainian have dented those hopes.
DAX Live Chart
German PMI Data
HCOB released flash PMI data today showing the private sector rose by the largest rate in 10 months. The Purchasing Mangers Flash PMI data rose to 50.9 from last month’s 50.4.
Today’s number is the highest level since May 2024 and is above the level of 50, indicating expansion.
Manufacturing Flash PMI came in below 50 at 48.3, but still a big jump from last month’s 46.5. Although the number is below 50, and at a contraction level, it’s the first increase in production data in almost 2 years.
The services industry lost some momentum, with the Flash PMI data showing 50.2, from last month’s 51.1. However, the number remains in expansion territory.
The bill for infrastructure spending that was approved last week is likely to continue driving expansion through the first quarter of 2025.
It remains to be seen how that spending will create long lasting change to growth.
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