The German DAX index recorded a strong rebound on Monday, rising by around 1.6% to break through the 24,000-point level on both the cash index and the DE40 contract. The rebound comes after US President Donald Trump announced that he would postpone the introduction of 50% tariffs on goods from the European Union until July 9. The decision was made after Trump spoke with European Commission President Ursula von der Leyen, who stressed that the EU needed more time to reach a trade agreement with the US.
The trade relationship between the EU and the US is quite significant. Source: Bloomberg Finance LP, XTB
The rebound in DE40 and other European index futures follows Friday's strong declines, when markets reacted strongly to the threat of immediate introduction of high tariffs. Today, the sectors most exposed to trade wars, namely automotive and luxury goods, gained the most - shares of Mercedes, BMW and Volkswagen rose by 1.9-2.1%. Banks and industrial companies also made up for losses.
Today we are observing a broad rebound in all sectors of the German DAX. Source: Bloomberg Finance LP, XTB
The market indicates that Trump's announcement brings relief, but does not solve the basic problems, so a return to greater volatility cannot be ruled out in the near future. There is less and less time left until early July, when the 90-day suspension of tariffs with most countries in the world expires, and the only major trade agreement was reached with Great Britain.
It is worth noting that today we have a market closure in the UK and the US, but the contracts market is operating. We are seeing a strong rebound in US futures on the main indices. Last week, Apple saw a strong sell-off, mainly due to Trump's threats to impose tariffs on the company if it does not bring iPhone production to the country.
DE40 is back above 24,000 points and is trading just below historical highs. We are also seeing a rebound in US futures. Key support for DE40 is the area of 23,500 points, from where the contract prices rebounded on Friday, and earlier in March we observed resistance there. On the other hand, potential resistance and buyers' target may be the area of 24,700 at the 127.2 retracement of the last major downward wave. Source: xStation5
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