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Gino Bruno D’Alessio•Tuesday, February 4, 2025•1 min read
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MARKETS TREND
German stocks had there worse single day drop since November 2024 after Trump confirmed tariffs on neighbors and China.
- DAX posted the largest 1-day drop since November 12
- Infineon jumps on better than forecast earnings report
- Auto and Telecos drag on index
The DAX posted a 1-day loss of 1.07% yesterday and today’s open sees the index losing 0.38% from the open. The confirmation of US tariffs on Canada, Mexico, and China shock the stock market as inflationary fears ignited.
Some Reprieve Seen from Counter Offers
Mexico and Canada have cut a deal to postpone tariffs for 1 month as Mexico commits to sending troops to the boarder. Both governments have pledged to fight illegal crossings.
The deal highlights the possibility of concessions on tariffs for the Eurozone. Something Trump has spoken openly about is EU military spending. Raising expenditure for their armed forces may be a path to avoiding tariffs in Europe.
DAX Live Chart
DAX
Auto and Teleco Sectors Weigh on DAX
The automobile sector lost 1% as the outlook for a turnaround in weak sales fails to arrive. The Teleco sector lost 0.8% as Vodafone dropped 6% after reporting another deterioration in Q3 in the German market.
The earnings report showed that Q3 earnings in Germany dropped 6.4%, an increase in the decline in Q2 of 6.2%. The company attributed the fall in revenue to the impact of a change in pay-tv laws.
Paring the decline of the DAX is the German chip-maker Infineon’s earnings report, stocks jumped as higher as 11%. The report showed a revised higher outlook for 2025 and beat quarterly revenue.
The revenue for fiscal Q1 (which runs from September) rose 8% to $3.5 billion from the previous company forecast of $3.25 billion.
The company also expects Q2 fiscal quarter revenue to rise to $3.7 billion, up from the previous forecast of $3.5 billion.
Gino D’Alessio is a professional Forex trader with 20+ years of experience in the financial markets as a broker-dealer. Having worked in New York and London, Gino is regularly featured on Seeking Alpha. He completed the CAIA program in 2015, which also gave great insight into global macro factors. His main focus is FX majors, indices and commodities.
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