DAX Connections: The 6 Markets That Move the DAX 40 (and How to Read Them)

The DAX rarely moves in a vacuum. Germany’s benchmark index — the DAX 40 (GER40) — is really a barometer of global and European risk appetite, packed with big exporters whose fortunes are tied to Wall Street, the wider European market, world trade and the price of energy. That makes it one of the more “connected” indices you can trade: when you know which markets tend to lead it, you can stop guessing and start reading the DAX in context.

This guide walks through the six markets most worth watching when you trade the DAX 40, ranked from the most dependable relationship down to the most situational. Think of it as a quick checklist to run through before you commit to a trade — a way to sense-check whether a DAX move has the wider market behind it.

Why correlations matter for DAX traders

A correlation simply describes how two markets tend to move in relation to one another. A positive correlation means they usually move the same way; a negative (or inverse) correlation means they usually move in opposite directions. None of these are guarantees — they are tendencies that hold most of the time and occasionally break — but read together they tell you whether a DAX move is part of a broad risk trend or something Germany-specific.

Here are the six, strongest and most reliable first.

1. The S&P 500 / US equities — check Wall Street first

The single most dependable relationship for the DAX is with US equities, and the two move in the same direction. The DAX carries a high global equity “beta” — in plain terms, it tends to amplify the mood of the broader stock market — and it takes much of its lead from Wall Street. When US risk appetite is firm, the DAX tends to rise with it; when the S&P 500 rolls over, the DAX usually follows.

Rule of thumb: the US tape is the first and best read on the DAX’s likely direction. Before acting on a DAX move, glance at S&P 500 futures — a DAX push higher backed by a firm Wall Street is far more convincing than one fighting a falling US market.

2. The FTSE 100 / Euro Stoxx — the European risk check

Europe’s major indices share the same macro backdrop: the same European Central Bank (ECB) policy cycle and the same regional risk flows. As a result, the DAX and its neighbours — the Euro Stoxx 50 and the UK’s FTSE 100 — tend to move together most days, again in the same direction.

Use them as a confirmation tool. If the DAX is rising and the Euro Stoxx and FTSE are rising too, you are looking at broad European risk-on. If the DAX is moving on its own while its peers are flat, the move is more likely to be Germany-specific — and worth treating with a little more caution.

3. Global growth proxies: copper and China — the export angle

The DAX is dominated by exporters: carmakers such as VW, Mercedes and BMW, industrials such as Siemens, and chemicals giants such as BASF. Many of these have heavy exposure to China and world trade, so the index trades on the global growth cycle — a positive relationship with growth-sensitive markets.

Two handy proxies for that cycle are the copper price (often nicknamed “Dr Copper” for its habit of tracking the health of the global economy) and Chinese demand. When copper is firm and Chinese activity is improving, that tends to lift the DAX. When the global growth outlook sours, the DAX — with its export-heavy makeup — often gets hit harder than more domestically focused indices.

4. EUR/USD — the currency angle

Here the relationship becomes regime-dependent, meaning it only holds under certain conditions. The classic link is inverse: a weaker euro makes German exports cheaper and more competitive abroad, and flatters exporters’ foreign earnings when they are converted back into euros. So the DAX often rises as EUR/USD falls.

The caveat: this link is looser than the FTSE’s relationship with sterling. In a broad risk-on mood, the euro and the DAX can happily climb together, so treat the weak-euro-helps-the-DAX idea as a tendency, not a fixed rule.

5. European natural gas and energy — the input-cost story

German manufacturing is highly energy-intensive, which gives the DAX another regime-dependent relationship — this time inverse — with European energy prices. A spike in European natural gas raises input costs and squeezes company margins, weighing on the DAX. This was painfully visible during the 2022 energy crisis.

The caveat: energy prices only dominate the DAX during genuine energy-supply shocks. When gas is cheap and plentiful, the relationship fades into the background, so keep it as a stress gauge you switch on when energy is in the headlines.

6. Euro-area bond yields (the Bund) — the discount-rate effect

The last relationship is the most situational of all. In theory, higher euro-area bond yields — tracked through the German Bund — lift the “discount rate” applied to companies’ future earnings, which can pressure the DAX, especially its faster-growing names. That points to an inverse link.

The caveat: the sign is not fixed. When rising yields reflect a genuinely stronger economy, or when they help the DAX’s large banks and insurers (who tend to earn more as rates rise), the DAX and yields can move up together. So watch why yields are moving, not just which way.

How to use this on your desk

You do not need to watch all six at once. A practical routine looks like this: start with US equities (the S&P 500) for the immediate read, check the Euro Stoxx and FTSE to see whether the move is broad European risk or Germany-specific, and then use copper and China, EUR/USD, energy prices and Bund yields to add colour depending on what is driving the market that day. When several line up in the same direction, you have a higher-conviction picture. When they disagree, that is your cue to be cautious — the DAX move may be fragile.

Remember that correlations describe typical historical tendencies, not guarantees. Any of these relationships can weaken, invert or break entirely around major news, central-bank surprises or thin, illiquid conditions. They are there to add context to your analysis, never to replace a proper trade plan and sensible risk management.

Get the free one-page DAX Correlation Playbook

We’ve put all six relationships onto a single, printable reference sheet — the exact IF / THEN / WHY for each market, ranked by reliability, so you can keep it beside your charts.

📥 Download the free DAX 40 — Daily Edge Correlation Playbook (PDF)

If you found this useful and want this kind of context delivered to you every session — the key markets, levels and the “why” behind the moves — take a look at The Daily Edge. It’s built to help you trade smarter, not harder.

Educational only, not financial advice. Trading carries risk, and past relationships between markets are no guarantee of future behaviour. Always do your own research and manage your risk. © HARKO Day Trading.