The DAX seems to have reached a ceiling at 24,000 points. The ongoing discussions between China and the U.S. are failing to provide any new momentum, as prices have risen too high in recent weeks. Merely avoiding a new escalation is not enough to drive further increases. The announcement of a vague framework for a trade agreement overnight has proven too lacking in detail for investor enthusiasm.
Now, negotiations are proceeding in a more typical manner, leading to questions about whether such a convoluted approach was necessary at all. The media-driven posturing, market crashes, and mutual tariffs exceeding 100% seem increasingly unnecessary. Trump is once again facing the reality of complicated and prolonged negotiations over the exchange of goods and services. Until a deal is reached, numerous variables can derail the process, including a potential loss for the U.S. government in front of the appellate court, which could rule on the legality of Trump’s tariffs in the upcoming hours.
The countdown has begun, and should things go poorly for Trump, he risks losing a vital tool that has allowed him to activate and deactivate tariffs at will. While a court decision would not abolish the tariffs immediately, it would complicate their enforcement. A ruling could come at any moment, and investor hesitation in recent days is closely tied to the anticipation of this verdict. The best-case scenario would mean that reciprocal tariffs in their current form may no longer materialize; conversely, the worst-case scenario could enable Trump to continue as before, maintaining the status quo of uncertainty.
Comment provided by Jochen Stanzl, Chief Market Analyst at CMC Markets.
