The Trump Hammer Hits Frankfurt: DAX Faces a Deep Red Start to the Week
The "Deal Maker" in the White House is getting serious once again. US President Donald Trump is swinging the tariff hammer, hitting Europe at an incredibly sensitive time. With the continent already under severe economic pressure due to the ongoing war in Ukraine and its strategic dependence on the US, the announcement of new trade barriers is sending shockwaves through the market. Although the DAX closed Friday on a positive note, the market is bracing for a sharp sell-off at Monday's open.
A Deja Vu of Fear: Memories of the 18-Percent Crash
Investors and traders remember with a sting the events of early April, when Donald Trump first introduced his tariff plans and the German leading index plummeted by a staggering 18 percent. The current scenario feels like a dangerous repeat performance. Adding fuel to the fire is the ongoing political thriller surrounding Greenland. As diplomatic fronts remain hardened, volatility on European equity markets is expected to skyrocket in the coming days.
Bayer Shines Alone Amid Losses for Brenntag and Continental
A rare bright spot at the end of last week was Bayer, which soared by 6.4 percent. The approval of a higher dosage for its product Eylea and a favorable review of the glyphosate dispute by the Supreme Court provided a massive boost. However, this upward momentum will now be put to a severe test by the broader market environment.
In contrast, cyclical stocks are already feeling the heat. Brenntag tumbled by over 3.4 percent on Friday, finishing at the bottom of the DAX list, followed closely by Continental, which dropped 2.2 percent. These companies are often the "canaries in the coal mine" when trade wars loom.
Europe in a Bind: A Geopolitical Standoff
In the coming week, all eyes will be on the diplomatic maneuvers regarding Greenland. While the EU and NATO are trying to maintain a strong bargaining position, Europe finds itself in a precarious geopolitical trap. With military threats from Russia to the east and economic pressure from the USA to the west, the European economy is caught in a vice.
Technical Summary: A significant "gap down" at the market open appears inevitable. The DAX is at a crossroads, and it remains to be seen whether the index can find a floor at psychologically key support levels. Extreme caution is advised as the "Trump Hammer" threatens to initiate a longer-term downward spiral.
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Forecasts are not guarantees. Rates may change. Political risk is unpredictable. Central bank actions may vary. Platforms’ tools do not guarantee success.