DAX Stumbles Despite Ifo Boost—Traders Left Scratching Heads

Germany’s benchmark index trips over its own feet as bullish economic data fails to spark momentum. Another case of ’good news’ that somehow translates to red on the ticker—because markets love irony almost as much as bankers love bonuses.

Technical indicators flash mixed signals while algos chew through the optimism. Meanwhile, portfolio managers reach for the antacids. Classic risk-on environment? Not today.

As stock investors wonder on Trump’s next move, stronger than expected Ifo numbers aren’t enough to keep the relief rally going.

• Ifo Business Climate at 86.9
• Trump may reduce tariffs on China
• German Finance Minister hopes for tariff reduction

The DAX opened lower this morning, trading down 0.87% after gaining nearly 4% from the start of the week.

 Ifo Numbers Show Optimism

Today’s Ifo Business Climate printed at 86.9 up from last month’s number of 86.7. And more importantly, higher than the forecast decline to 85.2.

Ifo Current Conditions improved from 85.7 last month to 86.4 in April and beat forecasts of a decline to 85.5.

Ifo Expectations, on the other hand, declined to 87.4 from 87.7 last month but still beat expectations of a drop to 85.

Optimism remains high as investors are still hoping for a generalized bilateral agreement for a reduction in tariffs.

Exports account for around 45% to 50% of German GDP, showing just how important a positive trade deal is for DAX companies.

Economic growth in German has been contracting over the past two, while the DAX has set one record after the other over the same period.

Trump’s Flip-Flopping

While Trump is accused generally of flip-flopping from one stance to another the markets react with extreme measures.

True it may be the US presidents is showing considerable turnarounds in many policy stances. However, I see a negotiator at the table and like all negotiations some drastic hands might be played.

The German Finance Minister has joined the chorus of other EU leaders in calling for a bilateral reduction in tariffs.

If that agreement were to materialize it would be a big win for US exports, which have been penalized compared to EU exports.

But it would also be a big win for DAX companies who have their largest trading partner in the USA.