After reaching a record high of 23,476 points on March 18, 2025, the German DAX index declined to 22,470 points yesterday, marking a 4.50% drop from its peak on March 18.
Despite this decline, the index remains up by approximately 14% since the beginning of the year, outperforming the French CAC40 (9%), the UK FTSE 100 (6%), and the European STOXX600 (7%). It has also outperformed major U.S. stock indices such as the S&P 500 (3%) and Nasdaq 100 (6%).
The primary reason for the DAX’s decline yesterday was Trump’s announcement of a 25% tariff on car imports, which negatively impacted the German automotive sector, including brands like Mercedes, BMW, and Volkswagen, which have significant exports to the U.S.
Recent German economic data indicate signs of weakness in the economy:
- Factory orders contracted by 7.0% on a monthly basis, a worse figure than expected (-2.4%) and the previous reading (5.9%).
- German exports shrank by 2.5%, lower than the previous reading (2.5%).
- The trade balance showed a surplus of €16 billion, below expectations (€21 billion) and the previous reading (€20.7 billion).
- The Producer Price Index (PPI) declined by 0.2% month-on-month, falling short of expectations (0.2%) and the previous reading (-0.1%).
- The Services Purchasing Managers’ Index (PMI) recorded growth of 50.2 points, lower than expectations (52.3) and the previous reading (51.1).
From a technical perspective, the DAX broke below its 20-day moving average at 22,894 points yesterday. The key challenge lies in reaching the strategic support level, which is the 50-day moving average at 22,300 points.
The Relative Strength Index (RSI) currently stands at 49 points, breaking below the neutral level of 50, signaling the beginning of negative momentum for the DAX.
Meanwhile, the MACD indicator shows a bearish crossover, with the MACD line (blue) crossing below the Signal Line (orange), further indicating downward momentum for the index.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
