DAX Clings to Support as Geopolitical and Earnings Pressures Mount

The German blue-chip index ended Wednesday’s volatile session at 24,194 points, surrendering early gains to close with a daily loss of 0.31%. The market’s inability to hold onto momentum underscores the powerful crosscurrents of rising oil prices, shifting central bank expectations, and a mixed corporate earnings season.

Geopolitical tensions proved to be the dominant theme, flipping sentiment on its head. While hopes for a diplomatic solution in the Middle East provided an early lift, reports of a potential end to the ceasefire in the Gulf region triggered a swift afternoon sell-off. This sent the price of Brent crude oil soaring past $110 a barrel at times, reigniting immediate inflation fears and pressuring energy-intensive DAX constituents from the chemical and automotive sectors.

Against this fraught backdrop, the interest rate landscape is also firming. The European Central Bank, holding its deposit rate at 2.00% for a sixth consecutive time, now forecasts inflation of 2.6% for 2026 alongside only marginal economic growth. Bond markets are now pricing in between one and two rate hikes by the end of the year, adding another layer of pressure on equity valuations.

Individual stock movements painted a picture of a deeply bifurcated market. Siemens Energy was a standout performer, soaring 7.47% to a new record high of €177.76. The rally was fueled by an optimistic outlook from its US rival, GE Vernova, lifting the entire energy technology sector, with utility RWE also advancing 3.88%. These gains starkly contrasted with steep declines elsewhere. Hugo Boss shares plunged roughly 10% at the open after the fashion group cut its sales and profit targets for the current year, with management not foreseeing improvement until next year.

Should investors sell immediately? Or is it worth buying DAX?

The telecommunications and defense sectors were also under pressure. Deutsche Telekom led the losers, falling 4.84% to €27.54, while aerospace supplier MTU Aero Engines dropped 3.08%. Airbus managed a slight gain despite lowering its annual delivery target, supported by a robust long-term order book.

Technically, the retreat has left the market in a precarious position. The DAX’s annualized volatility sits near 25%, reflecting extreme nervousness. Its 14-day Relative Strength Index (RSI) has fallen to 30.6, indicating a nearly oversold condition, though this alone does not guarantee an imminent bottom. The index is now testing its critical 200-day moving average, which currently lies at 24,114 points. A decisive break below this level could trigger further selling pressure.

For the remainder of the week, investor focus will split between corporate results and macroeconomic signals. Earnings from heavyweights like MTU Aero Engines and Brenntag are due, alongside early signals from the banking sector. Macro attention is already turning to the upcoming Eurozone Purchasing Managers’ Index (PMI) data for clues on economic health, and ultimately to the ECB’s next rate decision on April 30, where the bank will need to defend its adjusted inflation expectations. Year-to-date, the DAX remains in negative territory, down 1.40%.