DAX Pulls Back as U.S. Tariffs Hit; AMD & Alphabet Ahead

Global Financial Markets Brief for Tuesday, February 4, 2025

• US-China Trade Tensions Escalate

  • The United States has implemented a 10% increase in tariffs on Chinese imports in effect from today. In response, China has imposed tariffs on U.S. energy exports.
  • China has also added export controls on tungsten-related materials, molybdenum, and other critical components often used in solar panels and high-end electronics.
  • Tariffs imposed by China include a 15% tax on LNG and coal, and a 10% tariff on crude oil.
  • However, investors expect negotiations to begin soon, limiting the negative reaction.

• Tariff Developments with Canada and Mexico

  • President Trump announced a 30-day pause on imposing 25% tariffs on Canadian and Mexican goods, contingent on enhanced border security measures.
  • The U.S. imports approximately 4 million barrels of Canadian oil daily, which cannot be replaced in the short term.
  • Crude oil prices spiked 3.7% yesterday but fell below yesterday’s low following the tariff suspension announcement.

• Market Volatility Amid Trade Policies

  • Global markets have experienced significant declines following the announcement of new U.S. tariffs on key trading partners.
  • Major indices, including the S&P 500, Nasdaq, and Dow Jones, have seen drops of up to 1.9%.
  • Analysts warn of increased economic disruption and potential inflation in the U.S. due to these tariffs.

• Global Economic Outlook

  • Despite recent challenges, several factors suggest potential economic growth in 2025.
  • The U.S. stock market is experiencing a significant boom, driven by expectations of continued economic growth fueled by tax cuts, fiscal stimulus, and deregulation.
  • Falling global interest rates and lower oil prices are providing support for risky assets like equities.

  DAX Technical Analysis 4 Hour chart

  

• The Germany 40 (DAX) CFD on the 4-hour chart is showing signs of a short-term pullback after reaching a recent high of 21,803. The price has broken below the 10 and 20 EMA, indicating a shift in momentum, and is now testing the 50 EMA at 21,401. If this level fails to hold, the next key support is around the 100 EMA at 21,145.
• The RSI is at 41, showing that selling pressure has increased, but it is not yet in oversold territory. The Stochastic RSI is near 32, suggesting that there is still some room for downside movement before reaching extreme oversold levels. This indicates that the pullback could continue before a potential bounce occurs.
• If the price manages to reclaim the 10 and 20 EMA, it could resume its uptrend and retest the resistance at 21,803. However, if selling pressure persists, a move toward the 200 EMA could provide a stronger buying opportunity.

Economic Calendar:

• 3:00 PM GMT - USD: JOLTS Job Openings (Dec)

  • Expected: 8.010M | Previous: 8.098M
  • JOLTS (Job Openings and Labor Turnover Survey) reports on job openings, hires, and separations.
  • Increased job openings and high quit rates can boost investor confidence, leading to stock market gains, as it indicates a strong labor market.
  • Conversely, declining job openings or rising layoffs may signal economic slowdown, potentially causing market pessimism.
  • Positive JOLTS data generally strengthens the U.S. dollar as it reflects economic robustness, attracting foreign investment. Negative data may weaken the dollar due to perceived economic vulnerabilities.

Earnings Aftermarket:

• Alphabet Inc. (GOOGL)
  • Analysts maintain a positive outlook on Alphabet's stock, with a consensus price target of $219, approximately 7% above the current price. (Bloomberg)
  • Support level: $196 | Resistance level: $205
  • Alphabet has surpassed earnings and revenue expectations in each of the last 8 earnings releases.
  • Options market anticipates a 6.60% move in GOOGL's stock price for the week ending February 7, 2025, and a 7.74% move for the month ending February 21, 2025.
• Advanced Micro Devices (AMD)
  • Expected revenue: $7.54 billion, marking a 22% increase from the same quarter last year.
  • Expected EPS: $1.08, up from $0.92 in the previous quarter.
  • Analyst Ratings: 8 "Buy," 5 "Hold," 1 "Sell."
  • Consensus price target: $164, approximately 43% above the current price of $114.50.
  • Options markets anticipate a move of about 9.10% in AMD's stock price for the week ending February 7, 2025, and approximately 11.08% for the month ending February 21, 2025.