The DAX is still showing no signs of a bottom formation or a clear trend towards one. The risk remains that new lows below 18,800 could occur in the coming days. Key support is at 19,300; if this is breached, the index could plunge to the next significant support at 17,550.
US president Donald Trump appears to be entangled in contradiction. He wants to attract manufacturers to the US to escape punitive tariffs but discusses deals that could undermine these efforts. There's also political uncertainty; he could lose Senate control in 2026’s midterm elections and won’t be president in four years. Companies typically plan capital-intensive investments with much longer time horizons, and this rushed strategy hasn’t inspired much business confidence. Many Americans also prefer cheap imports over domestic production.
With no sign that Trump will acknowledge any missteps, one could almost set a clock by the arrival of a recession. Risk aversion is rising sharply, and cash is king. There have been massive sell-offs of US Treasury bonds over the past three days, pushing 10-year yields from around 3.9% to 4.5%. The countries Trump is antagonising are also among the largest US creditors. If their sentiment turns, it could spell disaster for the US, which needs to refinance trillions of dollars in the coming years.
Amid this volatility and unpredictability, there’s also the looming threat of a major hedge fund or bank facing distress. There’s no guarantee that the collateral damage resulting from Trump’s confrontational stance won’t lead to contagion effects that could become unmanageable.
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