DAX Cracks Below 24,700 as Rate Jitters and VW’s Sweeping Job-Cut Plan Trigger Flight

Germany's blue-chip index slid 1.29% as new Fed Chair Warsh dampens rate-cut hopes and Volkswagen mulls up to 100,000 job cuts, wiping out almost all 2025 gains.

A punishing mix of monetary-policy anxiety and a deepening auto-sector crisis sent Germany’s blue-chip index sliding sharply on Friday, wiping out almost all of its 2025 advance. The DAX closed at exactly 24,671 points, down 1.29% on the day, leaving the year-to-date gain hovering at barely half a percentage point.

Two distinct shockwaves collided in Frankfurt. Across the Atlantic, newly installed Federal Reserve Chair Kevin Warsh poured cold water on hopes of near-term rate cuts, insisting that price stability remains his overriding priority. His remarks ignited fears of additional rate increases this year, prompting institutional investors to dump cyclical and growth-heavy positions. On the domestic front, Volkswagen emerged as the day’s biggest drag after reports surfaced that the automaker is mulling up to 100,000 job cuts worldwide and the possible closure of four German plants. The state of Lower Saxony, which holds a 20% stake, has already signalled its opposition, leaving analysts to scratch their heads over the restructuring’s ultimate cost.

Auto and Tech Stocks Bear the Brunt

Volkswagen shares collapsed nearly 4% to €74.28, making it one of the worst performers in the index. The selloff extended to other carmakers: BMW also fell, unable to escape the sector-wide downdraft. But the pain was even sharper in the e-commerce space. Zalando tumbled 5.75% after the German financial regulator BaFin launched a probe into possible accounting irregularities, adding a regulatory headache to the wider rate-driven retreat. Siemens Energy and Infineon lost ground as well, with the chipmaker suffering additional pressure from weak US technology-sector cues and rumours that OpenAI’s IPO may be delayed.

Defensive names provided a rare glimmer of resilience. Henkel and utility E.ON managed modest gains as investors rotated into safe havens. Commerzbank also held steady, buoyed by persistent speculation that UniCredit could be building a strategic stake — a narrative that has increasingly framed the lender as a standalone success story.

Capital Markets and Chart Signals

Away from the DAX heavyweights, space specialist OHB announced a capital increase, issuing 1.6?million new shares to raise gross proceeds of roughly €482?million. At Nürnberger Beteiligungs-AG, Vienna Insurance Group has initiated a squeeze-out procedure.

Technically, the index is wobbling dangerously close to its 50-day moving average, now at around 24,603–24,604 points. That level served as the next support cushion after the psychologically important 24,700 mark gave way. The relative strength index has slipped to 48, indicating that while the market is not yet oversold, momentum has clearly evaporated. A further drop could test the longer-term trendline near 24,278 points. On the upside, the 25,000 threshold remains a formidable resistance.

Politics and Data Dominate the Week Ahead

The coming days will be shaped by political developments and fresh US inflation figures that could reinforce or temper the rate debate. German Finance Minister Klingbeil has finalised the federal budget, with the cabinet scheduled to vote on the draft on 6?July. Market observers are already warning that proposed subsidy cuts could weigh on sentiment. On a brighter note, the DIW expects construction output to grow 1.7% this year, offering a rare piece of good news for a sector that has been under pressure.