DAX, Oil Forecast: Two trades to watch

DAX rises after steep losses & amid tariff worries

• Germany’s Green could block fiscal reforms
• Trump trade uncertainty raises growth worries
• Volkswagen rises despite a cautious outlook

The DAX uptrend remains intact despite yesterday’s 2.7% decline

The DAX was seen opening higher on Tuesday after falling sharply yesterday on concerns that Trump's trade policies could cause a future recession in the US. Meanwhile, questions over Germany's ability to pass its fiscal reform through parliament also dragged on sentiment.

Germany's Greens vowed to block incoming chancellor Friedrich Merz's defence and infrastructure spending plans unless they include genuine support for climate policies in the economy.

This objection highlights the risks that this massive fiscal U-turn may not pass. That said, it seems to be more of an opening to discussions rather than a complete objection.

The eurozone economic calendar is quiet. Yesterday, eurozone economic sentiment improved significantly, rising to -2.9 from -12.7, with Germany a clear outperformer amid optimism surrounding the expected fiscal reform.

Meanwhile, German industrial production was also stronger than expected, increasing 2% month over month in January after falling 1.5% at the end of last year.

In corporate news, Volkswagen is rising despite giving a cautious outlook for the year ahead amid weak demand, high costs, and uncertainty created by trade tensions. The carmaker posted solid financial results for 2024 with sales revenue of €324.7 billion, up from €322.3 billion in 2023.

Looking ahead to the US session, JOLTS job openings will be in focus. They are expected to rise to 7.7 million, up from 7.6 million. Weaker-than-expected data could fuel recession fears, sending stocks lower once again.

DAX forecast – technical analysis

After running into resistance at the record high of 23.479, the DAX rebounded lower, finding support on the upper band of the rising channel. Despite the correction lower, the uptrend remains.

Buyers will look to recover towards 23,000 and fresh record highs.

Immediate support can be seen at the rising support line at 22,450. Below 22,130, the late February low comes into play ahead of the 21,500 round number. A break below 21,100 would negate the longer-term uptrend.

Oil steadies, but tariff & recession concerns remain

• OPEC+ will increase supply in April but may be flexible
• US recession fears weaken the demand outlook
• API oil inventory data is due later
• Oil tests multi-year lows

Oil prices have steadies after steep losses and are edging higher on Tuesday despite ongoing concerns over a potential US recession, the impact of trade tariffs on global growth, and as OPEC+ looks set to ramp up supply next month.

OPEC+ will press ahead with a planned reduction in voluntary output cuts in April. For now, the price is finding support, knowing that OPEC+'s supply response will remain flexible depending on market conditions. Russian Deputy Prime Minister Alexander Novak said on Friday that OPEC+ could reverse the decision to increase output if there were market imbalances.

Meanwhile, the demand outlook is deteriorating owing to President Trump's protectionist policies, which have roiled markets, fueling fears of a recession in the US, the world's largest consumer of oil. President Trump refused to rule out a recession, calling it a period of transition for the economy.

API oil inventory data is due later today, and it is expected to share that stockpiles rose distillate and gasoline inventories fell. The EIA inventory data and OPEC's monthly report will be released tomorrow..

Oil forecast – technical analysis

Having extended its decline from 80.00, reached in early January, Oil is once again testing the support zone 65.20- 66.30.

Sellers supported by momentum would need to break below this level to bring 63.50, the 2023 low, into play.

Any recovery above 66.30 brings 68.30, the late December low, into focus ahead of 70.00. A rose above here negates the near-term selloff.