The German DAX index opened Tuesday’s trading session with gains, marking a positive start to the day. As of 9:35 AM, the benchmark index stood at approximately 24,115 points, representing a 0.6 percent increase compared to the previous day’s closing level. Siemens Energy, Infineon and Siemens Healthineers led the gains, while BASF, Vonovia and Volkswagen were among the weakest performers.
“Investor optimism has been significantly dampened by yesterday’s reversal in the DAX” stated Jochen Stanzl, Chief Market Analyst at CMC Markets. The prospect of new record highs has been temporarily dashed. Stanzl noted a complete unwinding of short-term speculative positions and a surprisingly unified negative reaction to the trade agreement with the United States. This contrasts with previous weeks where the DAX often managed to climb despite adverse news.
“The shift in market sentiment is rooted in the trade agreement’s concrete nature” Stanzl explained. It now removes the possibility of glossing over the details. “The numbers are on the table. The agreement is binding, reflecting the speed at which it was reached. This predictability fundamentally alters the dynamics. Uncertainty within the DAX is giving way to a certainty that is predominantly viewed negatively”. Calculated impacts of tariffs, now significantly higher than previously, are projecting a somber outlook, outweighing potential benefits derived from increased planning certainty.
However, the market expert highlighted the technical and psychological state of the market. “A key support level at 23,900 points has been defended despite predominantly selling pressure yesterday. This illustrates the continued presence of buying interest, or at least a reluctance to sell, at this level, offering some hope for today’s trading.
The 23,900 point level is now the point of focus for investors. “It could be uncomfortable if this support level breaks” cautioned Stanzl. A sustained decline below this threshold would increase the risk of a broader sell-off, potentially exacerbated by automatic stop-loss orders. “The DAX is currently, idiomatically speaking, walking a tightrope”.