Was the 2025 DAX Crash Endogenous? Evidence from the Log-Periodic Power Law Model

In this article, we investigate whether the crash of the German DAX index following the U.S. tariff announcement in April 2025 is consistent with pre-existing endogenous market fragility rather than a purely exogenous shock. The analysis is conducted within the Log-Periodic Power Law (LPPL) framework using the Filimonov–Sornette (FS) specification, complemented by shrinking-window estimation, Ornstein–Uhlenbeck residual diagnostics, surrogate time-series analysis, and a GARCH-based Monte Carlo false-positive assessment. The results reveal a statistically stable critical period preceding the observed market collapse, within which the tariff announcement occurred and was followed by a pronounced market decline. Overall, the findings suggest that the market operated in a regime of elevated systemic fragility, where the tariff announcement may have acted as a triggering event within an already critical state. This study contributes to the literature on financial critical phenomena by providing evidence that LPPL-based critical windows may be interpreted as periods of heightened systemic vulnerability rather than precise crash forecasts. From a risk management perspective, such periods may be informative for identifying conditions under which markets are particularly sensitive to external disturbances.