02/06/25 10:09:07

Weekly outlook: “A breather at a high level”

In addition to the legal tug-of-war over the legality of US tariffs, new tariffs on US steel imports are now being imposed. However, the markets remain calm. Nevertheless, the uncertainty is weighing on corporate investment.


2 June 2025. FRANKFURT (Börse Frankfurt). The customs chaos continues, but there are no major setbacks on the markets. “The back-and-forth on both US import tariffs for the EU and US court rulings on Trump's import tariffs continues to dominate the stock markets,” notes Thorsten Weinelt of Commerzbank. At the same time, the fundamental environment is improving, with key interest rate cuts by the ECB and brightening economic indicators. Nevertheless, he does not expect any major upward jumps: “After the strong price gains of recent weeks, we now expect the stock markets to take a breather at a high level.”

On Monday morning, the DAX stood at 23,871 points after closing at 23,997 on Friday – and 24,326 points at its all-time high last week. The US stock markets went into the weekend virtually unchanged on Friday.

“Big beautiful bill” as the next challenge

Claudia Windt from Helaba also believes that the stock markets are proving surprisingly stable. “Investors seem to be continuing to bet on a positive scenario with regard to tariffs,” she suspects. However, the uncertainty that has already been caused is working its way through the economy and weighing on companies' investment decisions. She sees Trump's “big beautiful bill” tax cut plans as the next issue that could prove to be a burden on public finances and the bond market.

“Treading water at a high level”

“Stock markets have always been driven by news. However, what is currently happening is rather unusual,” comments technical analyst Christoph Geyer with regard to US tariff policy. The DAX, however, seems rather unimpressed by this back and forth. Last week, the index treaded water, but at a high level. The old resistance zone now serves as support. “Even though some of the indicators are showing sell signals, the index is not yet under pressure,” Geyer notes. However, the comparatively high trading volumes on Friday pointed to increased nervousness. “The short-term trend is also likely to depend on the meeting between Chancellor Merz and US President Trump.”

Christoph Geyer

Interest rate cut firmly planned

In addition to the meeting between Merz and Trump, there is another important political event this week: Today, Monday, a second round of direct negotiations between Russia and Ukraine on ending the war will take place in Istanbul.

The European Central Bank's interest rate decision on Thursday is likely to be rather unspectacular. “The market consensus is that the ECB will cut key interest rates by another 25 basis points,” explains Deutsche Bank. Despite eight interest rate cuts in the current easing cycle, declining inflation and continued weak economic growth argue in favor of this. “The interest rate futures markets are assuming at least one further interest rate cut by the end of the year, with a pause in July.”

Important economic and financial data

Tuesday, 3 June

11:00 a.m. Eurozone: Consumer prices for May. DekaBank expects inflation to fall further, from 2.2 per cent in April to 1.9 per cent in May. 

Wednesday, 4 June

Index review. Deutsche Börse Group is conducting its regular review of the composition of the DAX indices. The results will be announced after the US stock market closes. 

Thursday, 5 June

8:00 a.m. Germany: Industrial orders for April. Commerzbank believes that orders are likely to have declined significantly. However, the decline will be smaller than the sharp increase in March. Overall, it will become apparent that German industry has passed the economic low point.

2:15 p.m. Eurozone: ECB interest rate decision. The market firmly expects the ECB to cut key interest rates by another 25 basis points. 

Friday, 6 June

8:00 a.m. Germany: Industrial production in April. According to DekaBank, German industry recently benefited from advance purchases by US importers. As this special economic situation is coming to an end, production in the German manufacturing sector is likely to have fallen in April.

2:30 p.m. US: May unemployment figures. Following a robust report for April, forecasts for May indicate a moderate slowdown, according to Deutsche Bank. The US economy is likely to have created only 130,000 new jobs, compared with 177,000 in the previous month. The unemployment rate is likely to remain at 4.2 percent.

by: Anna-Maria Borse, 2 June 2025, © Deutsche Börse AG

Anna-Maria Borse is a financial and business editor specializing in financial markets/stock exchanges and economic issues.

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