Weekly outlook: Financial package versus US tariffs
For weeks, the DAX benefited from billions in additional future spending. Now US tariffs are coming back into focus. However, the seasonality probably speaks against a real trend reversal.
24. March 2025 FRANKFURT (Börse Frankfurt). The DAX is holding at a high level, but the time of rapid price rises seems to be over. “Critical statements by ECB chief Christine Lagarde on a possible trade war with the USA may have contributed to this,” notes Ulrich Wortberg from Helaba. “Madame Lagarde is taming the DAX,” says Martin Siegert from LBBW.
Monday morning looks like a small recovery: The DAX stands at 23,008 points after 22,892 points at the close of trading on Friday. On Tuesday, the index had reached a new high of 23,476 points. The US stock markets closed slightly higher on Friday, but are still well below their record highs.
“The planned debt package had been cheered by the stock market for weeks”, explains Uwe Streich from LBBW. The advance praise was based on the expectation that the additional investments would significantly boost domestic GDP growth - albeit probably not until 2026. “However, this is offset by the fact that the highly disruptive policies of US President Donald Trump have the potential to paralyse global trade.”
Small caps in the fast lane?
DWS fund manager Sabrina Reeh is nevertheless confident about German equities - especially second-line stocks. “There is a good chance that the poorer performance of second-line stocks, which has persisted for more than three years, could come to an end,” says Reeh. On average, second-line stocks generate 30 percent of their profits in Germany, whereas DAX companies only generate 20 percent. “If the new German government succeeds in tackling the structural problems and boosting growth, the positive effects should be stronger for second-line stocks than for the largely globally active blue chips.” In addition, second-line stocks are currently valued very low and will not be affected quite as much by US tariffs. However, DWS is also optimistic about the DAX: it has raised its price target for March 2026 from 22,500 to 24,000 points.
Sabrina Reeh
“Don't write off US stocks”
Jens Herdack from Weber Bank looks at the diverging developments in Europe and the USA. “While investors were still very confident at the beginning of Trump's term in office, they are now reacting with increasing uncertainty,” he notes. “Erratic threats and withdrawals of tariffs, rising prices and declining growth expectations are not the ingredients for successful stock market performance.” The bank therefore continues to recommend a higher proportion of European equities while at the same time slightly reducing US stocks in the portfolio. “However, we would not write off US equities,” emphasizes Herdack. This is because the expected earnings growth of US companies is still higher in absolute terms than that of their European competitors.
“Positive short-term outlook”
Technical analyst Christoph Geyer points out that major expiry dates for options and futures - such as last Friday - are often used to generate a trend reversal. “However, the seasonality statistics currently speak against such a trend reversal.” Rather, a rather positive statistical phase is now imminent. “Even if the DAX is likely to make a correction sooner or later, the short-term outlook is positive.”
Christoph Geyer
Important economic and business events of the week
Monday, 24. March
Index adjustments DAX family: The index adjustments announced at the beginning of March by Stoxx Ltd, the index subsidiary of Deutsche Börse Group, come into effect: Renk, flatexDegiro and DWS Group are promoted to the MDAX. Schott Pharma, Siltronic and Hypoport join the SDAX.
10.00 am. Eurozone: Purchasing Managers' Index March.
Tuesday, 25. March
10.00 am. Germany: ifo Business Climate March. According to DekaBank, the mood among financial analysts has already skyrocketed following the decision on the special funds for infrastructure and defense. It now also expects an exceptionally strong increase in the business climate for the ifo survey of companies.
Friday, 28. March
9.55 am. Germany: Unemployment figures for March. While German companies were more confident about the future, they continued to cut jobs, notes DekaBank. With less tailwind from the weather, the increase in the number of unemployed will be even greater than in the previous month.
1.30 pm. USA: Price index consumer spending excluding food and energy February. Commerzbank expects the Fed's preferred inflation measure to rise more sharply than the previously published consumer and producer prices for February. It forecasts an increase of 0.33 percent for the core rate compared to the previous month. Extrapolated on an annualized basis, this would be 4 percent, twice as much as the Fed's inflation target of 2 percent.
by: Anna-Maria Borse, 24. March 2025, © Deutsche Börse AG
About the Author
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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