Market sentiment: "Freedom and its consequences"

2 April 2025. FRANKFURT (Goldberg & Goldberg). The fact that the DAX has temporarily lost around 4.6% of its value since our last sentiment survey is probably not only due to the 25% car tariffs announced by Donald Trump last Wednesday. Rather, it is today's much-discussed “Liberation Day”, on which the US President is likely to announce further comprehensive tariff measures at 22:00 CEST, that will stir emotions. And as one commentator rightly pointed out, this will not be a simple event to assess, but will involve measures with potentially complex consequences. The “better” or “worse than expected” yardstick often used by stock market commentators for other economic events is also unlikely to be applicable to the tariffs to be announced today. This is because expectations are by no means clear. Nor is today's “Liberation Day” likely to eliminate all market risks in one fell swoop - experience shows that changes, relativizations and modifications are also likely in the coming weeks. From this perspective, there is no quick release from market risks.

Batten down the hatches
Sentiment among the institutional investors we surveyed with a medium-term trading horizon has now deteriorated in view of the upcoming events. Our Börse Frankfurt Sentiment Index has fallen by 14 points compared to the previous week to a new level of -10. At the same time, the bear camp has grown by 9 percentage points, with this increase being made up in roughly equal measure of previously neutral players and former optimists. The latter have turned their position directly from “bullish” to “bearish”.

Sentiment among private investors has changed just as much as among their institutional counterparts. The Börse Frankfurt Sentiment Index in this panel also fell by 14 points to a new level of +6. The bottom line is that 7% of investors have directly turned their opinion 180° from “bullish” to “bearish”. The majority of these position changes are attributable to those investors we surveyed via social media: The optimism of this subgroup has fallen drastically compared to the previous week, but the other investors have also adopted a more pessimistic stance, albeit to a lesser extent, compared to the previous week. At the same time, the sentiment gap between the two subgroups has narrowed significantly.

No unanimous opinion
With today's survey, the sentiment gap between private and institutional investors has remained unchanged. It should be noted that the decline in the DAX, which is down 3.3% week-on-week, is probably largely home-made, especially as the demand from long-term investors that has repeatedly emerged in previous weeks seems to have subsided, at least during the reporting period.

However, it is also clear that the recent change in sentiment among institutional investors towards the negative is limited. This is also evident in the relative analysis over three and six months; the pessimism values are even slightly lower compared to the absolute figures. The same applies to private investors, whose optimism has declined in relative terms, meaning that investors are more likely to be neutral.

The bottom line is that domestic investors are taking a neutral stance on the expected US tariff measures, although the sentiment of the DAX has improved slightly compared to the previous week. Viewed in isolation, however, the current positioning does not suggest a new trend. 

by Joachim Goldberg

2 April 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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