The DAX kicks off the new trading week with significant gains, following a familiar pattern dictated by Donald Trump. The stock market seems to dance to Trump’s tune: first a threat, then a pullback, quickly followed by a rebound as speculative investors anticipate a concession from the U.S. President. This morning’s confirmation of such expectations reinforces the so-called “Trump Pattern,” which is increasingly seen as a successful strategy for risk-tolerant investors.
Trump continues to set the rules of the game, with the current conflict with the European Union being the latest in a series of similar confrontations. Investors should mark July 9 on their calendars, as this is the deadline for negotiations between the EU and the U.S. to reach a conclusion. June is likely to be a turbulent month for the stock market, as the U.S. will be negotiating agreements with numerous partners worldwide to avoid reciprocal tariffs. Increased volatility is not out of the question if Trump intensifies pressure on other trading partners in a similar fashion.
Despite the uncertainties, the upward trend in the DAX remains intact, although the 24,000-point mark represents a significant hurdle in the short term. With today being a holiday in New York, orientation from Wall Street will be lacking, which could lead the DAX to fluctuate temporarily between 23,900 and 24,000 points.
Written by Jochen Stanzl, Chief Market Analyst at CMC Markets
