Market sentiment: "Wait until settlement"

26 March 2025. FRANKFURT (Goldberg & Goldberg). Since our last sentiment survey, the DAX has had a turbulent week, but ultimately the trading range was only around 2.8% (below average for this year). The fact that there were repeated volatile phases in between may also be due to Donald Trump, who wants to announce comprehensive tariffs on April 2 under the name “Liberation Day”, especially for trading partners that he accuses of “ripping off” the USA. On the other hand, the scope and nature of these tariffs are repeatedly put into perspective by the US President: At one point there should be more, then again, as was recently heard, as few exceptions to the tariff measures as possible.

The bottom line, however, is that attempts to push the DAX sharply higher have been repeatedly rebuffed by the stock market, so that only a tiny temporary gain has been recorded since our survey last Wednesday, although the subsequent temporary setback did not cause fear and anxiety either. Nevertheless, the stock market barometer has lost 1.1% in value compared to the previous week.

Losses limited
Meanwhile, sentiment among the institutional investors we surveyed has improved slightly compared to the previous week. Our Börse Frankfurt Sentiment Index has risen by 6 points to a new level of +4. This is primarily because former bears have used the temporary setback in the DAX to cover their positions. This applies to 5 percent of respondents, although only very few dared to go directly to the bull side. This was probably primarily because the buybacks by the bears had the character of loss limits - most of them joined the neutral players.

The vote among private investors was much clearer. The Börse Frankfurt Sentiment Index rose by 7 points to a new level of +20 in this panel, reaching its highest value so far this year. However, this increase is almost entirely attributable to those private investors we survey via social media. They have ensured that former pessimists (3% of all respondents) have turned their commitment 180° from bearish to bullish - the remaining investors were only slightly more positive compared to the previous week. This means that the gap between social media participants and other private investors has widened once again: As has often been the case, the former are considerably more bullish.

Hesitant and cautious 
At first glance, the sentiment gap between institutional investors and private investors has widened. However, if we exclude the group surveyed via social media, both panels have a similar structure and are not far apart in terms of sentiment. This shows a certain reluctance in both panels to position themselves more strongly ahead of the aforementioned “Liberation Day” and the upcoming end of the quarter. And as far as institutional investors are concerned, there is also only slight optimism in the relative view over three and six months.

On balance, however, these positions are not suitable for triggering a major trend in one direction or the other. Nevertheless, it is clear that the optimists are somewhat better positioned than the remaining pessimists, whose demand we still expect to be mainly in the 22,600/650 DAX points range. On the other hand, we believe that the first supply from bullish engagements is more evident in the 23,650/700 points range. However, it is still the long-term oriented international capital flows that are likely to trigger the next major trend in the current favorable environment for the DAX. 

by Joachim Goldberg

26 March 2025, © Goldberg & Goldberg für boerse-frankfurt.de

Der Börse Frankfurt Sentiment-Index bewegt sich zwischen -100 (totaler Pessimismus) und +100 (totaler Optimismus), der Übergang von positive in negative Werte markiert die neutrale Linie. 

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