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Tech stocks led the charge, with the Nasdaq Composite Index rallying 2.74%, while the Dow and the S&P 500 advanced 1.23% and 2.03%, respectively.
US Inflation Data and Fed Outlook in Focus
On Friday, April 25, the finalized University of Michigan Consumer Survey will draw interest. According to the preliminary survey, the Inflation Expectations Index surged from 5% in March to 6.7% in April, while the Sentiment Index tumbled to 50.8 in April, down from 57. Higher inflation may delay Fed cuts, while weaker sentiment points to softening demand, raising stagflation risks.
A higher inflation print and lower sentiment reading could test risk sentiment. Conversely, a lower inflation expectations reading may ease fears of a Fed policy hold, boosting risk appetite.
Meanwhile, trade developments and central bank signals remain critical for risk assets. A de-escalation in the US-EU and US-China trade wars could fuel demand for German-listed stocks. However, renewed trade frictions could trigger a market sell-off.
DAX Outlook: Watching Macro and Central Bank Cues
The DAX’s near-term trajectory hinges on inflation data, central bank guidance, and tariff-related headlines.
Potential DAX Scenarios:
- Bullish Case: Easing trade tensions, softer US inflation expectations, or dovish central bank rhetoric could push the DAX toward 22,500.
- Bearish Case: Rising trade tensions, higher inflation expectations, or hawkish central bank guidance may pull the DAX toward 21,500.
As of Friday morning, the DAX futures were up 99 points, while the Nasdaq 100 mini gained 98 points, indicating a positive open.
Technical Setup: Cautious Optimism
According to the daily chart, the DAX trades above the 50-day and the 200-day Exponential Moving Averages (EMA), reinforcing bullish momentum.
- Upside Target: A break above the April 24 high of 22,082 could support a move toward 22,500. A decisive move through 22,500 may bring the record high of 23,476 into play.
- Downside risk: A drop below the 50-day EMA may test support at 21,350, with sub-21,000 levels back in view if selling intensifies.
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