The DAX Index surged on Monday, making it one of the best-performing indices in the market. It jumped by over 1.5% to a high of €24,000, a few points below its all-time high of €24,157. This article explains why the blue-chip German index rose and what to expect this week.
Why the DAX Index is soaring today
The German DAX index jumped after Donald Trump talked with Ursula von der Leyen on Sunday. In a statement afterwards, he said that they had agreed to pause the expected 50% tariff he had hinted at last Friday. The new tariffs will rise to 50% in July.
This statement is in line with what we predicted during the weekend. In that article, we noted that the 50% threat was a negotiating tactic as he did with China, when he implemented a 145% tariff.
A 50% tariff would have blocked most trade from Europe. It would also have pushed many European companies to cancel their orders from the United States. Ryanair, the biggest airline in Europe, has already hinted that it would cancel its orders with Boeing if tariffs rose.
There is also a likelihood that the trade relationship between the US and Europe will become better in the coming months.
Most companies in the DAX Index rose on Monday. Siemens stock jumped by over 2.76% on Monday and was the best-performing firm. It was followed by Heidelberg Materials whose stock jumped by 2.63%.
Rheinmetall, MTU Aero, Airbus, Infineon, Siemens Energy, Commerzbank, and Continental stock prices rose by over 2%.
Notably, these are some of the best-performing companies this year. Rheinmetall has jumped by almost 200% this year, while Commerzbank, Siemens Energy, Heidelberg Materials, and Deutsche Bank have all jumped by over 40% this year.
The DAX Index also jumped as investors predicted that the European Central Bank (ECB) will cut interest rates in the next meeting. In a statement, the Lithuanian Central Bank governor said:
“I see scope for an interest-rate reduction. The risks that inflation will be below the goal in the future have increased.”
The next key catalysts for the DAX Index will be the upcoming NVIDIA earnings and Federal Reserve minutes. Strong NVIDIA numbers will be a sign that the AI industry is still doing well and that the bubble has not burst yet.
While NVIDIA is an American company, its performance has an influence on European stock indices. Similarly, Federal Reserve minutes may impact the performance of global stocks.
DAX 40 Index analysis
The daily chart shows that the German DAX Index has risen to a record high this year. It formed a hammer candlestick pattern on Friday after Trump warned of tariffs to Europe.
The reality, however, the index has done well since Trump launched his trade war a few months ago. It has remained above the 50-day and 100-day Exponential Moving Averages, a sign that bulls are in control.
Therefore, the index will likely continue rising as bulls target the key resistance point at 24,500. A drop below the support at 23,400 will invalidate the bullish outlook.
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