[ad_1]
Private Sector PMIs to Spotlight Tariffs
Flash private sector PMIs on Wednesday, April 23, will likely reflect the early effects of US tariffs on economic conditions. Economists expect Germany’s HCOB Services PMI to fall from 50.9 in March to 50.2 in April. The Manufacturing PMI is forecast to drop from 48.3 to 47.6.
Weaker-than-expected PMIs could fuel recession fears, supporting multiple ECB rate cuts, though demand for risk assets may hinge on investor sentiment.
US Markets Rally as Trump U-Turns on China
US equity markets rebounded on Tuesday, April 22, after President Trump softened his tone on China tariffs. The Nasdaq Composite Index jumped 2.71%, while the Dow and the S&P 500 rallied 2.66% and 2.51%, respectively.
A potential thaw in US-China trade relations buoyed market sentiment and hinted at a broader shift in the White House’s approach. Trump also moved to ease concerns over Fed independence.
The Kobeissi Letter commented on the overnight developments, stating:
“Trump is now claiming that tariffs on China will come down from 145%. It seems like tariffs are set to come down and Powell is staying (for now).”
While stating that tariffs will drop, Trump reportedly clarified that tariffs won’t drop to zero but will be significantly lower, setting a positive tone for the April 23 European session.
US Private Sector PMIs, the Fed, and Trump in Focus
On Wednesday, April 23, US private sector PMIs will give insights into the US economy. Economists expect the crucial S&P Global Services PMI to drop to 52.8 in April, down from 54.4 in March. A sharper drop could renew concerns over slowing growth and weigh on equities.
Conversely, an unexpected pickup in service sector activity may ease recessionary fears, bolstering risk sentiment.
Ongoing trade developments will also remain in focus—de-escalation may counterbalance weak PMI data, while new tensions could pressure German stocks.
Near-Term Outlook: DAX Sensitivity to Macro Risks
The DAX’s near-term trajectory will depend on private sector PMIs, central bank guidance, and tariff-related headlines.
Potential DAX Scenarios:
- Bullish Case: Easing trade tensions, upbeat private sector PMIs, or dovish central bank commentary could push the DAX toward 21,500.
- Bearish Case: Rising trade tensions, weaker PMI data, or hawkish central bank rhetoric may pull the DAX toward 20,500.
As of Wednesday morning, the DAX futures were up 516 points, while the Nasdaq 100 mini gained 335 points, indicating a breakout start to the session.
Technical Warning Signs Flash
Daily Chart:
After Tuesday’s gains, the DAX trades above the 200-day Exponential Moving Average (EMA) but remains below the 50-day EMA, indicating the uptrend lacks short-term confirmation.
- Upside Target: A break above 21,500 could pave the way to the 50-day EMA, with 22,000 as the next key resistance level.
- Downside risk: A drop below 21,000 could enable the bears to target the 200-day EMA, with 19,675 as the next support level.
[ad_2]
