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Manufacturing sector data also weighed on sentiment. The Philly Fed Manufacturing Index declined from 18.1 in February to 12.5 in March. The future new orders index for future general activity plunged to its lowest level since 2023, reflecting the potential impact of US tariffs on demand.
US Markets Fall Amid Economic Uncertainty
US equity markets trended lower on Thursday, March 20. Investor concerns over tariff policies and the US economy impacted risk assets. The Nasdaq Composite Index and the S&P 500 dropped by 0.33% and 0.22%, respectively, while the Dow edged 0.03% lower.
New US sanctions on Iran and reports of Israeli strikes on Gaza also pressured sentiment.
As markets brace for Germany’s parliamentary vote, traders should monitor tariff developments. Any threats of higher tariffs or retaliatory rhetoric from EU lawmakers could spook investors.
Additionally, traders should monitor FOMC commentary on the economic impact of tariffs, which could influence broader market sentiment.
Near-Term Outlook: Key Drivers
The DAX’s near-term outlook depends on:
- German fiscal policy: The Upper House vote will be crucial for DAX trends.
- Tariff developments: US-EU and US-China tariff disputes remain critical risks.
- Fed policy outlook: FOMC insights into tariffs, inflation, and the economic outlook could drive volatility.
Potential DAX Scenarios:
- Bullish Case: If trade tensions ease, fiscal stimulus is passed, and central banks signal dovish policies, the DAX could retest its record high of 23,476.
- Bearish Case: If US-EU trade tensions escalate, Germany’s Bundesrat rejects fiscal reforms, or the ECB adopts a hawkish stance, the DAX could slide toward 22,500.
As of Friday morning, the DAX futures were down 55 points, while the Nasdaq 100 mini fell 14 points, signaling a cautious end to the week.
DAX Technical Indicators
Daily Chart:
Despite Thursday’s sell-off, the DAX remains well above the 50-day and 200-day Exponential Moving Averages (EMAs), suggesting strong bullish momentum. However, tariff and fiscal-driven volatility present potential short-term downside risks.
- Upside Target: A breakout above 23,350 could support a move to Tuesday’s record high of 23,476, with the bulls eyeing 23,750.
- Downside risk: A drop below 22,750 may test 22,500. A break below 22,500 would bring the 50-day EMA into play.
With the RSI at 55.36, the DAX remains below overbought levels (above 70), signaling room for a climb above its all-time high of 23,476 toward 23,750.
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