Snapshot: The DAX 40 has drifted lower to the 24,800 level, weighed down by localized margin compression in the automotive sector despite a constructive domestic inflation backdrop. Today’s ECB wage tracker pointed to stable negotiated wage pressures for 2026, reinforcing the ECB’s path after Germany’s HICP landed at 2.0%, though trading desks remain defensive following President Lagarde’s 12:50 CET address.
- German auto heavyweights remain the primary headwind, with BMW’s 7% plunge dragging Mercedes-Benz and Volkswagen down by up to 3% as China demand concerns linger.
- Global macro conditions offer little relief as US 10Y real yields hold at 2.15% and WTI crude grinds at $95, keeping input costs elevated ahead of the New York open.
Bias into NY: We maintain a tactical bearish bias, looking to short intraday bounces below 24,850 with a target of 24,710. While stable wage metrics limit aggressive ECB policy risks, the technical damage to German industrial heavyweights and pre-Fed de-risking will cap afternoon recovery attempts.