Frankfurt Stocks: DAX Index Tumbles Despite Hopes for Interest Rate Cuts

The DAX index closed 0.33% higher at 23,924.36 points on Wednesday, while the MDax index rose 0.45% to 30,963.77 points. Market analyst Jürgen Molnar notes that investors remain uncertain due to ongoing trade policy issues and conflicting hopes for US interest rate cuts, which are influencing stock purchases. Despite technical challenges, the DAX has the potential to reach new records, with the current high of 24,639 points within reach.

Title: Global Markets React to Fed Rate Cut Hopes and Trade Policy Uncertainty

Global markets experienced a mixed day on Wednesday, with the DAX index closing 0.33% higher at 23,924.36 points, while the MDax index rose 0.45% to 30,963.77 points. Market analysts, such as Jürgen Molnar, noted that investors remain uncertain due to ongoing trade policy issues and conflicting hopes for US interest rate cuts, which are influencing stock purchases.

The DAX index's potential to reach new records, with the current high of 24,639 points within reach, was highlighted despite the technical challenges posed by these uncertainties. The Federal Reserve's decision to potentially cut interest rates in September has bolstered market sentiment, with the U.S. dollar steadying against the Japanese yen and the euro.

In Europe, the STOXX 600 index rose 0.4% in early trading, echoing the strength across Asia markets, where the MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.8%. The U.S. stock market, however, saw a modest rise, with tech stocks surging overnight, driven by positive earnings reports and expectations of sustained demand for AI services.

The U.S. Fed's rate cut odds have risen to 94%, according to CME Fedwatch, following weak U.S. jobs data and the firing of the head of labor statistics responsible for the figures. This development has added to the case for a Fed rate cut, with market participants seeing at least two quarter-point cuts by the end of this year.

In the currency market, the dollar edged up modestly, rising 0.1% against the Japanese yen at 147.23, while the euro fell 0.1% to $1.1559. The dollar index rallied 0.2% after a two-day decline.

Trade policy uncertainty also played a significant role in market movements. The White House announced new tariffs on imports, with rates ranging from 10% to 41% based on each country’s trade balance with the U.S. The tariffs will take effect on August 7, applying a minimum 15% rate on countries with trade deficits and maintaining a 10% rate on others. Mexico was given a 90-day trade negotiation period, with tariffs kept at 25%.

The U.S. stock market saw mixed results, with major U.K. companies such as HSBC, Rio Tinto, and BAE Systems reporting disappointing earnings. However, tech heavyweights like Nvidia, Alphabet, and Meta surged, driven by positive earnings reports and expectations of sustained demand for AI services.

Despite the mixed performance, the DAX index's potential to reach new records remains within reach, driven by the anticipation of Fed rate cuts and the resilience of the global economy.

References
[1] https://www.reuters.com/world/china/global-markets-wrapup-3-2025-08-05/
[2] https://san.com/cc/white-house-unveils-new-trade-policy-tariff-plan-hours-before-aug-1-deadline/
[3] https://ng.investing.com/news/stock-market-news/ftse-100-today-index-falls-as-hsbc-rio-tinto-bae-results-weigh-bodycote-soars-2033469