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US Stocks Drop as Tariff and Economic Fears Weigh
On March 6, US equity markets tumbled amid tariff uncertainties and US economic jitters. The Nasdaq Composite Index slid by 2.61%, while the Dow and the S&P 500 posted losses of 0.99% and 1.78%, respectively.
Rising odds of a US economic recession signaled a shift in sentiment amid Trump’s tariff flip-flopping. According to Kalshi, the odds of a 2025 US recession stood at 39%, up from 17% in January.
Key Economic Data Ahead: The US Jobs Report to Influence Fed Rate Cut Bets
On March 7, the US Jobs Report will impact Fed rate cut bets, sentiment toward the US economy, and risk appetite.
- Economists expect the US unemployment rate to remain at 4% in February and wage growth to rise 4.1% year-on-year, matching January’s rise.
- Economists forecast a 160k increase in nonfarm payrolls, up from 143k in January.
Lower unemployment, rising wages, and higher nonfarm payrolls may sink June Fed rate cut bets. A more hawkish Fed rate path may test demand for risk assets. Higher borrowing costs could dampen corporate earnings. Conversely, softer labor market data could boost expectations of a June Fed policy move, potentially driving demand for risk assets.
Near-Term Outlook
The DAX’s near-term trends hinge on:
- German fiscal policy: Progress on fiscal rule changes and an infrastructure fund.
- Trade tensions – Escalating US-EU and US-China trade disputes pose downside risks.
- US Jobs Report – Labor market data will influence Fed policy expectations and DAX price trends.
If fiscal stimulus, easing trade tensions, and dovish central bank signals align, the DAX could rally toward 24,000. However, policy roadblocks, escalating trade risks, and a hawkish Fed may push the index back toward 23,000.
As of Friday morning, the DAX futures were down 229 points, while the Nasdaq 100 mini gained 89 points, signaling a choppy Friday session.
DAX Technical Indicators
Daily Chart:
After Thursday’s gains, the DAX sits well above the 50-day and 200-day Exponential Moving Averages (EMAs). However, tariff-fueled volatility suggests potential short-term downside risks within the broader uptrend.
A break above Thursday’s record high of 23,476 could signal a move toward 23,750. From there, a break above 23,750 may enable the bulls to target 24,000.
Conversely, if the DAX breaks below 23,350, sub-23,000 levels would likely come into play.
With the RSI at 65.98, the DAX remains below overbought levels (above 70), suggesting room for a move toward the 23,476 high.
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