DAX Stocks Continue Upward Trend Despite US Tariffs

The recent imposition of extensive import tariffs by the US government has significantly impacted the stock markets, particularly reflected in the DAX index. Despite the turmoil, certain DAX stocks are managing to maintain an upward trajectory, highlighting their resilience in a challenging economic landscape.

As the market grapples with the uncertainties brought about by these tariffs, investor sentiment remains cautious. The potential for reciprocal tariffs poses a risk of escalating trade tensions that could lead to a global recession, raising concerns about the economic outlook.

Currently, an analysis of the 40 indices monitored reveals that 39 are trading below their 200-day moving averages, indicating a bearish trend overall. However, the momentum investing strategy remains relevant--historically, stocks exhibiting strong performance tend to continue their upward movement. This is the basis for the momentum screen, which ranks stocks based on relative strength.

The momentum screen operates on the principle that stocks with a significant upward trend will continue to attract attention. This is measured using the relative strength ratio (RSL), which compares the current stock price to its average price over the past 26 weeks. Stocks trading significantly above this average are considered to have momentum.

In light of the recent turbulence, US stock indices have seen substantial declines, with sectors like transportation and small-cap stocks particularly affected. Conversely, defensive utilities have shown more stability amidst the chaos. Among international markets, Poland's WIG index stands out as a rare performer, bolstered by strong stocks such as PKO Bank Polski and Orlen.

Within the DAX and MDAX indices, trends have shifted with the rise and fall of various sectors. Recent fluctuations have seen banking stocks, including Deutsche Bank and Commerzbank, rise while real estate companies like Vonovia experienced declines. This dynamic appears linked to changing interest rates, influenced by fiscal policies and market reactions to tariff announcements.

Investors are advised to exercise caution and not engage in reactive trading, as such strategies may exacerbate losses. For instance, while Vonovia has seen a 7.1% increase over the past ten trading days, it remains below its 200-day average, indicating a lack of a sustainable upward trend.

In contrast, Deutsche Börse has emerged as a notable beneficiary of the market fluctuations. As trading volumes have surged, the exchange has capitalized on the increased activity, resulting in a robust first quarter. Analysts anticipate positive earnings reports, reinforcing Deutsche Börse's position as a leading player in the current market environment.

In summary, while the current market conditions present challenges, certain stocks within the DAX are demonstrating resilience. The ongoing assessment of momentum and relative strength will be crucial for investors navigating this turbulent landscape.