DAX Fades After Hot US Inflation Data

Germany’s blue-chip index had been up as much as 0.8% before fading to a gain of about 0.2% by the afternoon. The pullback left the 21-day moving average in focus, with traders watching whether the index can hold above that short-term trend line after the inflation surprise dented momentum.

The move underscored how closely European equities remain tied to US macro data. Higher-for-longer US rates can tighten global financial conditions, pressure borrowing costs and reduce the appeal of stocks that have been priced for an easier policy backdrop.

Among single names, Rheinmetall led the DAX and MTU Aero Engines ranked second, keeping defense and aerospace in demand. In the MDAX, Kion rose 3.6% even after cutting its full-year outlook and pushing back medium-term targets because of weak demand, while Lufthansa fell about 2% after Portugal picked the German carrier as preferred partner for a stake in TAP.

Elsewhere in German mid- and small-caps, Evotec jumped 9% after better-than-expected quarterly results and confirmation of its reduced annual targets, while PNE slumped 18% after trimming earnings guidance to its weakest level in six years.

For investors, the key near-term test is whether US inflation keeps the Fed on the sidelines longer than markets had hoped. That would keep pressure on equity multiples, support the dollar and leave the DAX vulnerable to further swings when US data or central-bank comments surprise to the upside.