Frankfurt, Germany – The German stock market rallied on Thursday after the US temporarily eased trade tensions with Europe, offering investors a much-needed respite. The DAX index soared as much as 8% early in the day before settling at 20,562.73 points, up 4.53%—though it closed near its daily low, signaling lingering caution.
Market Reaction to US Tariff Relief
- DAX: +4.53% (20,562.73 pts)
- MDAX (mid-caps): +3.37% (25,703.63 pts)
- EuroStoxx 50: +4.3%
The rally followed US President Donald Trump’s decision to suspend country-specific auto tariffs for 90 days, replacing them with a flat 10% levy. However, tensions with China worsened, as Trump hiked tariffs on Chinese imports. The EU Commission delayed retaliatory tariffs, easing immediate fears of a full-blown trade war.
Investor Sentiment: Relief Meets Skepticism
While markets cheered the temporary truce, analysts warned against over-optimism:
- Marcel Mußler, Chart Analyst: “This isn’t the end—just a pause for negotiations. Trump’s unpredictability remains a risk.”
- Lori Calvasina, RBC Capital Markets: “US stocks aren’t out of the woods yet, despite Wednesday’s rebound.”
The Dow Jones and Nasdaq 100 had surged 8% and 12%, respectively, on Wednesday but fell 3% and 4% by Thursday’s close, reflecting ongoing volatility.
Key Takeaways for Traders
- Short-Term Relief: Tariff delays buoyed European equities, but Trump’s erratic policies could reignite selling pressure.
- China Risk: Escalating US-China tariffs may offset gains from the EU-US détente.
- Technical Outlook: The DAX’s failure to hold early highs suggests weak follow-through buying.
Bottom Line: Markets remain at the mercy of trade war headlines. Investors should brace for choppy trading and hedge exposures.
