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US Markets Start the Week Mixed Amid Tariff Uncertainties
Amid ongoing tariff uncertainty, US equity markets posted mixed results on April 28, capping the DAX’s gains. The Dow and the S&P 500 gained 0.28% and 0.06%, respectively, extending their winning streaks to five sessions. Meanwhile, the Nasdaq Composite Index fell 0.10%, ending its four-day rally.
Despite the softer stance on auto tariffs, concerns about the US-China trade war tested investor sentiment. This week, Beijing canceled a sizable pork shipment, targeting Trump’s farming constituency, potentially escalating tensions. The move followed recent tariff cuts on select US imports to tackle rising domestic prices and support the economy.
US Consumer Confidence and Labor Market in Focus
Later today, US consumer confidence data will influence market sentiment. Economists forecast the CB Consumer Confidence Index to slide from 92.9 in March to 87 in April. A sharp drop may signal a pullback in spending. Given private consumption contributes over 60% to US GDP, weaker sentiment may fuel recession fears and impact risk assets.
Labor market data will also be in focus. Economists expect JOLTs job openings to fall from 7.568 million in February to 7.5 million in March. A weaker labor market may impact wage growth, consumer confidence, and consumption.
The Kobeissi Letter recently reported on the chances of a US recession, stating:
“1-year recession odds priced by the S&P 500 earnings yield and the BBB-rated corporate bond spread have jumped to 60%, the highest since 2022. Over the last few weeks, the probability of a downturn has TRIPLED. In the past, every time this metric surpassed 80%, the US economy was in a recession.”
Rising recession risks could heighten market sensitivity to economic data, earnings, and central bank guidance.
Near-Term Outlook
The DAX’s near-term trajectory hinges on economic indicators, trade headlines, and central bank guidance.
- Bearish Scenario: Rising US-EU trade tensions, weak economic data, and hawkish central bank commentary could send the DAX below 22,000.
- Bullish Scenario: Progress on a US-EU trade deal, strong economic reports, and dovish central bank rhetoric could drive the DAX toward 22,500.
DAX Technical Indicators
Daily Chart
The DAX remains above the 50-day and 200-day Exponential Moving Averages (EMA), supporting a bullish outlook after a five-day winning streak.
A breakout above the April 1 high of 22,574 could open the door toward 22,750. A decisive move through 22,750 may enable the bulls to target 23,000.
On the downside, a fall below 22,000 could expose the 50-day EMA. A sustained break below the 50-day EMA may bring the 21,500 handle into sight.
The 14-day Relative Strength Index (RSI) at 57.81 suggests the DAX could climb toward the record high of 23,476 before entering overbought territory (RSI > 70).
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