After its euphoric all-time high the day before, the DAX suffered a significant setback on Friday. The index was caught up in a renewed escalation of the trade conflict between the US and China, tumbling by a sharp 1.5 percent to close at 24,241.46 points. The trigger was the US President questioning a planned summit after China expanded its export restrictions—the US's direct response was raising tariffs on Chinese imports. This action follows the US President's familiar pattern of negotiating with "carrots and sticks." Investors are therefore expecting early de-escalation signals, which are already slightly visible in pre-market trading.
Market Psychology: Did Private Investor Sentiment Reverse the DAX?
Beyond geopolitics, the question of potential market overheating becomes pressing. Although the German market was blindsided by the tariff shock, the sentiment of US private investors had already turned bearish days before Trump's announcement. This suggests that the market may have already been ripe for a correction, even without a direct fundamental or technical catalyst.
Brenntag in Freefall – Is a Sustained Downtrend Looming?
Among individual stocks on Friday, Brenntag (-4.9 percent), Infineon (-3.5 percent), and MTU Aero Engines (-3.4 percent) were the biggest losers. This sharp drop accelerates the downtrend for Brenntag stock, which is once again testing the psychologically important 50-euro mark. While it remains to be seen whether a base can be formed here, analysts are viewing the stock with price targets below 50 euros.
Deal or Volatility? DAX Must Prove the Substance of the Year-End Rally
In the new trading week, the DAX must prove that the initiated year-end rally has substance. Friday's sell-off was impulse-driven. An end to the trade conflict between the world's two largest economies could significantly calm the markets. However, the path to a deal appears rocky. Investors must therefore continue to expect elevated volatility until clear progress in negotiations becomes apparent.
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