DAX Posts Largest One-Day Gain Since Crisis of 2008
German stock market reacts to 90-day reprieve on all tariffs, as Goldman Sachs lifts recession call.
- China gets slapped with 125% tariffs
- Other countries get a 90-day exemption
- Technical outlook remain weak for DAX
The DAX posted a massive rally yesterday of 8.89% in a reaction to the news Trump has suspended tariffs for 90 days.
Trade War on Hold Not Over
Trump decided to put most tariffs on hold, as countries have come forward to offer negotiations. China on the other hand has been handed even higher tariffs at 125%.
While it seems the trade war may be averted, since most countries have stated their intention to come to negotiations on tariffs. There is a lingering risk that those negotiations may not produce the desired results.
The US president said that China is going to figure out a solution for tariffs. A lot remains to be seen as to how willing China will be to take measure that could affect its positive trade balance.
As all this plays out, Goldman Sachs lifted the recession call it had made just over an hour earlier.
DAX Live Chart
Economic Data and Trade Balance
Economic data from Germany has not been backing up the performance of the DAX for the past 2 years.
Valuations have increased over the past years, the P/E average for the DAX was 14.2 in March 2022, going to a high of 17.5 in March 2024. The current P/E average for the index is 16.15%.
While GDP Growth has shown 2 years of contractions, the only metric keeping companies’ books in the black has been exports.
The trade balance has expanded from a surplus of €87.6 billion in 2022 to a surplus of 238.6 billion in 2024.
The US is Germany’s largest trading partner with a trade surplus of €70 billion in 2024.
Technical View
The day chart below for the DAX shows a market in a bear trend with prices below the Ichimoku cloud.
Yesterday’s massive one-day rally hit the resistance of the cloud, and today’s momentum is indicating a technical correction. Very common after a large move to see some profits taking, leading to a reversal.
The next support level is at 20,531 (orange line), while major resistance is found at the bottom of the cloud.
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