DAX advances as UK Inflation Rises, Trump Eyes New Tariffs

Market Update – 19. February 2025

Asian Stocks Mostly Higher on Strong Japan Exports & China Property Data

• Asian markets advanced, supported by:
• Japan's export growth accelerating sharply.
• China’s new home prices declining the least in six months, signaling stabilization in the property sector.
• Regulatory optimism in China, lifting sentiment.
• RBNZ cut rates by 50bps to 3.75%, in line with expectations.

European Markets Mixed Amid Hot UK Inflation

• UK January CPI: 3.0% YoY (expected: 2.8%), weighing on FTSE 100 & European indices.
• Pre-market trading suggests mixed openings as investors digest inflation data.
• Key upcoming data:
• French inflation.
• Economic sentiment indicators for the Eurozone & Germany.

 

DAX Technical analysis 1 Day

The Germany 40 (DAX) daily chart continues to show strong bullish momentum, reaching a new high of 22,937.2. The price remains well above the 20, 50, 100, and 200 EMAs, confirming the ongoing uptrend.

The RSI is in overbought territory, indicating strong bullish sentiment but also suggesting that the market could be due for a short-term retracement. Similarly, the Stochastic RSI is near extreme levels, potentially showing that a pullback may be on the horizon before further upside movement.

If the price breaks and holds above 22,937, the next upside target could be the psychological levels of 23,000-23,100. On the downside, key support levels to watch are 22,471 (recent breakout level) and 22,128 (previous resistance now turned support). A break below these levels could lead to a deeper correction toward 21,750-21,500.

Bitcoin Extends Losses as Risk Sentiment Weakens

• Bitcoin fell 0.4% to $95,347, marking its fourth consecutive day of declines.
• Market concerns:
• Fresh U.S. trade tariff threats from President Trump.
• Investors awaiting Federal Reserve’s latest meeting minutes.
• Speculation that the Fed may keep rates higher for longer, boosting the USD and pressuring crypto prices.
• MicroStrategy rebrands to "Strategy" and launches a $2B debt offering to expand Bitcoin holdings.
• Total BTC holdings: 478,740 BTC, reinforcing its position as the largest corporate Bitcoin holder.

Trump’s New Tariff Threats Target Autos, Semiconductors & Pharmaceuticals

• Trump plans to impose 25% tariffs on:
• Automobiles (as soon as April).
• Semiconductors & pharmaceuticals (delayed for industry adaptation).
• Key implications:
• Intended to boost U.S. manufacturing.
• Tariffs set to be confirmed by April 2 after policy review.
• Markets expect Trump to use tariffs as a negotiation tool, similar to postponements on Canada & Mexico tariffs.

Oil & Precious Metals Rise

• Oil prices climbed, as markets anticipate supply risks from U.S. & Russia and awaited updates on Ukraine peace talks.
• Gold & silver gained, benefiting from inflation concerns & geopolitical uncertainties.

RBA Signals a Cautious Rate Cut Cycle

• RBA cut rates by 25bps to 4.10%, marking the start of Australia’s easing cycle.
• Key takeaways from Governor Michele Bullock:
• Growth expected to stabilize above 2% in 2025.
• Inflation to remain in the 2-3% target range.
• Further rate cuts unlikely in the near term, markets may be too optimistic on easing.
• Market reaction:
• Australian dollar strengthened as rate cut bets were dialed back.
• Australian bond yields rose.

Iron Ore Prices Surge to 4-Month High

• Iron ore (62% Fe) hit $107/ton, driven by:
• China’s stimulus measures, including $693B in government bond issuance.
• Local authorities buying property from distressed developers, stabilizing China’s real estate sector.
• Increased demand for industrial metals, with expectations of:
• Higher global infrastructure spending.
• Potential large-scale defense & reconstruction programs in Europe.

Market Summary:

• Asia: Bullish sentiment from Japan & China supports risk appetite.
• Europe: Cautious amid hot UK inflation & economic sentiment data.
• US: Investors await Fed minutes for clues on rate trajectory.
• Crypto: Bitcoin under pressure from macro headwinds & regulation concerns.
• Commodities: Iron ore & industrial metals strong amid China’s stimulus & potential European spending plans.