Will the DAX withstand the impact of tariff disruptions?
Afternoon Trading: Is the Downturn in the DAX Justifiable?
The earlier announced tariffs had a substantial impact on the financial markets, including the Dow Jones Industrial Average (DJIA), even in the afternoon trading. Following the announcement, the DAX on the Frankfurt stock exchange fell significantly, reaching its lowest point since early February. In the afternoon, the DAX dropped by over two percent to around 21,860 points. The MDAX dropped nearly two percent to 26,955 points, and the EuroStoxx lost three percent.
The US dollar was among the biggest losers in the market, coming under pressure against all major currencies, particularly the euro. At its peak, the exchange rate of the common currency rose to 1,1144 US dollars, the highest it had been in half a year. "The US dollar is not benefiting from its safe-haven status," commented DekaBank experts. Instead, the currencies of the euro and the Japanese yen strengthened. "Apparently, investors see risks mainly for the USA."
President Trump had threatened for weeks with an unprecedented tariff package. His plans, presented the previous night, are complex, but they aim to impose tariffs of ten percent on all imports from all countries. Moreover, the US government announced a complex mechanism of reciprocal tariffs that could result in higher duties for many countries, including the European Union (EU). This means that exports from EU member countries to the United States will be subject to a tariff of 20 percent starting next week.
Contains material from dpa-AFX
Tariffs and the Stock Market: European Union and DAX
European stock markets initially declined significantly as the tariffs took effect. For instance, on April 9, 2025, the Euro STOXX 50 fell by about 4.1%, the broader STOXX 600 dropped 4.4%, and France’s CAC 40 declined 4.2% [2]. By April 11, amid escalating China-US tariff tensions, the DAX index showed a more modest decline of around 1%, while other European indexes also remained subdued [3]. The volatility is expected to continue due to ongoing trade uncertainties and tariff developments [4]. Investors remain cautious, especially given the trade tensions between the US and China and pending negotiations with the EU. The European Commission has paused its retaliatory tariffs to allow space for talks [1][5].
Forex: The US Dollar and Euro
The Euro has strengthened against the US dollar amid investors' flight from US assets over tariff worries. The EUR/USD exchange rate increased by about 1.4% around April 11, 2025, indicating a weaker dollar relative to the Euro in response to trade tensions [3]. This suggests that the tariffs and ensuing trade disputes are undermining confidence in the US dollar in the near term, as investors seek safer or more stable assets, including the Euro.
Oil Prices: The Trend Remains Volatile
While the search results do not provide explicit details on oil prices, typically, trade tensions and economic uncertainty can lead to volatility in oil markets. Tariffs affecting industrial metals and manufacturing could indirectly reduce oil demand expectations, potentially suppressing prices. Since no direct data is available in the search results, it is reasonable to infer that oil prices are experiencing some volatility congruent with global market uncertainty, but specific trends would require more current data.
Gold Prices: A Silver Lining in Uncertain Times
Gold has performed strongly as a hedge amid ongoing trade uncertainty. Since the start of the year leading up to late April 2025, gold prices have gained approximately 27%, reflecting investor appetite for safe-haven assets [4]. This trend is expected to continue as market volatility remains elevated and trade tensions persist, making gold a preferred asset during geopolitical and economic uncertainty.
Summary of Outlook
The immediate impact of tariffs has been negative for European equity markets, especially in Germany’s DAX, though some stabilization has occurred. The US dollar is weakening relative to the Euro due to diminished investor confidence caused by tariff uncertainties. Gold prices are rising sharply, serving as a refuge amid the trade conflict. Oil markets are likely volatile but lack specific data; the economic slowdown risk could dampen prices. The outlook remains contingent on trade negotiations and possible tariff adjustments in the coming months.
- The announced tariffs led to a significant drop in the DAX, MDAX, and EuroStoxx during the afternoon trading, with the DAX reaching its lowest point since February.
- The Euro strengthened against the US dollar as investors flocked to safer assets due to concerns about the tariffs' impact on the US economy.
- Trade tensions have caused volatility in oil markets, potentially reducing oil demand expectations and affecting prices.
- Gold prices have increased as a hedge against ongoing trade uncertainty, with the trend expected to continue due to elevated market volatility.
- The outlook remains uncertain and is contingent on future trade negotiations and potential tariff changes.
