DAX rally continues as investors ignore tariff war

The DAX index has posted strong gains in the Friday session. Currently, the index is at 12,393, up 0.54% on the day. On the release front, German and eurozone manufacturing PMIs disappointed, missing their estimates.

It’s been a good week for the DAX, which has jumped 2.9 percent. Earlier on Friday, the DAX touched 12,458 points, a high for September. Clearly, risk appetite remains strong, despite the U.S and China exchanging another round of tariffs this week. On Monday, U.S President Trump announced 10% tariffs on some $200 billion worth of Chinese goods. China quickly responded, slapping 10% tariffs on $60 billion in US exports. These tit-for-tit tariffs have become a familiar script, only this time investors haven’t panicked and snapped up U.S dollars. Investors are somewhat relieved that the tariffs are just 10%, and China is taking measures to reduce the effect of the tariffs on its economy, including increasing stimulus and infrastructure spending. Global growth remains strong, despite the tariff spat. Although China has threatened to cancel upcoming trade talks with the U.S in protest of the recent tariff decision, investors are in an optimistic mood.

German and eurozone manufacturing PMIs were soft in September. The German indicator dropped sharply, from 56.1 to 53.7, missing the estimate of 55.7 points. This marked the weakest reading since August 2016. It was a similar story from eurozone manufacturing PMI, which fell from 54.6 to 53.3, the lowest level since October 2016. This marked the ninth straight month that the indicator has weakened – in December 2016, the indicator stood at 60.6 points. There was better news from services PMIs. German Flash Final Services PMI rose to 56.5, above the estimate of 55.1 points. The eurozone release improved to 54.7, above the estimate of 54.5 points.

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Economic Calendar

  • 3:30 German Flash Manufacturing PMI. Estimate 55.7. Actual 53.7
  • 3:30 German Flash Services PMI. Estimate 55.1. Actual 56.5
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 54.4. Actual 53.3
  • 4:00 Eurozone Flash Services PMI. Estimate 54.5. Actual 54.7

*All release times are DST

*Key events are in bold

 

DAX, Friday, September 21 at 7:10 DST

Previous Close: 12,326 Open: 12,396 Low: 12,382 High: 12,460 Close: 12,393

DAX rally continues despite US tariffs on China

The DAX index has posted gains in the Thursday session, continuing the upward trend seen on Wednesday. Currently, the index is at 12,284, up 0.54% on the day. On the release front, there are no major German or eurozone events. Eurozone consumer confidence is expected to post a decline of -2 for a second straight month. On Friday, Germany and the eurozone release manufacturing PMIs.

The US-China trade war ratcheted upwards this week, as the U.S. imposed 10% tariffs on some $200 billion worth of Chinese goods. Previous rounds of tit-for-tat tariffs have rocked the equity markets, but that hasn’t happened this time around. The DAX has shrugged off the news, gaining 1.8% this week. It is notable that German automakers, which could be hit hard by further tariffs, have posted strong gains on Thursday. BMW is up 1.24%, Daimler has risen 0.94% and Volkswagen has climbed 1.69%. Bank shares have also posted gains – Deutsche Bank is up 1.13% and Commerzbank has jumped 2.79%.

Why the calm reaction from German equity markets? Investors appear to have been ready for a move by Trump, and may be sighing in relief that the tariff was set at 10% rather than at 25%. One senior economist summed up Trump’s most recent salvo as “bad but manageable”. However, if the Chinese do indeed retaliate and the U.S takes further measures, this would likely shake up the currency markets and boost the U.S dollar.

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Economic Calendar

Thursday (September 20)

  • 10:00 Eurozone Consumer Confidence. Estimate -2
  • 11:15 German Buba President Weidmann Speaks

Friday (September 21)

  • 3:30 German Flash Manufacturing PMI. Estimate 55.7
  • 4:00 Eurozone Flash Manufacturing PMI. Estimate 54.4

*All release times are DST

*Key events are in bold

 

DAX, Thursday, September 20 at 6:50 DST

Previous Close: 12,219 Open: 12,208 Low: 12,202 High: 12,295 Close: 12,284

DAX higher despite new Trump tariffs

The DAX index has posted considerable gains in the Tuesday session. Currently, the index is at 12,149, up 0.44% on the day. On the release front, there are no German or eurozone indicators. On Wednesday, the eurozone releases current account and Germany holds an auction for 10-year bonds.

There was growing speculation that another round of tariffs in the U.S-China trade war was in the offing, and President Trump has delivered the goods. On Monday, Trump imposed tariffs of 10% on some $200 billion worth of Chinese goods and threatened further action if China retaliated. Why did the currency markets not react? Investors were braced for a move by Trump, and may be sighing in relief that the tariff was set at 10% rather than at 25%. One senior economist summed up Trump’s most recent salvo as “bad but manageable”. However, if the Chinese retaliate and the U.S takes further measures, this would likely hurt the equity markets.

ECB President Mario Draghi will be speaking at events on Tuesday and Wednesday, and the markets will be hoping for some insights after last week’s ECB policy meeting. As expected, the benchmark rate was held at 0.00%. However, in a slight the Bank announced that it would wind up asset purchases at the end of this year. As well, the ECB will trim its monthly bond purchases from EUR 30 billion to 15 billion, starting in October. These measures mark a vote of confidence in the eurozone economy, which has softened in the second quarter, but still remains solid. If there is no sudden downturn in economic conditions, investors can look forward to the ECB finally winding up its stimulus program.

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Economic Calendar

Tuesday (September 18)

  • 3:15 ECB President Draghi Speaks

Wednesday (September 19)

  • 4:00 Eurozone Current Account. Estimate 22.4B
  • Tentative – German 10-year Bond Auction
  • 9:00 ECB President Draghi Speaks

*All release times are DST

*Key events are in bold

 

DAX, Tuesday, September 18 at 6:25 DST

Previous Close: 12,096 Open: 12,089 Low: 12,078 High: 12,185 Close: 12,149

DAX slips on fears of more US tariffs on China

The DAX index has started the week in red territory. Currently, the index is at 12,069, down 0.45% on the day. On the release front, Eurozone Final CPI ticked lower to 2.0%, matching the estimate. Final Core CPI also matched the estimate, at 0.1%.

Is the US-China trade war about to get uglier? The world’s two largest economies have already exchanged tariffs, and President Trump has threatened to sharply up the ante and impose tariffs of some $200 billion on China. Trump may be bluffing, but his rhetoric could torpedo trade talks with China. The timing of any new tariffs remains uncertain, as well as the level of the tariffs – will they be 10% or a far more punitive 25%? Investors remain on alert, and the specter of another tariff announcement from the U.S and the likely retaliatory response from China could boost the dollar this week against the euro. If the U.S does go ahead with further tariffs, it could put a chill on more than the equity markets. According to a report from UBS, a tariff of 10% on Chinese products could slow U.S growth in the fourth quarter and result in the Federal Reserve skipping a December rate hike.

The U.S ended the week with mixed numbers. Retail sales in August dropped to 0.1%, down from 0.5% a month earlier. This missed the estimate of 0.4%. Core retail sales followed a similar trend, falling from 0.6% to o.3%. It missed the forecast of 0.5%. These key consumer spending numbers come on the heels of CPI, which came in at just 0.2% and missed the estimate of 0.3%. There was better news from UoM Consumer Sentiment in September, which jumped to 100.8, above the estimate of 96.7 points, This marked the first time that the indicator cracked the 100-level since March.

 

Economic Calendar

Monday (September 17)

  • 5:00 Eurozone Final CPI. Estimate 2.0%. Actual 2.0%
  • 5:00 Eurozone Final Core CPI. Estimate 1.0%. Actual 1.0%
  • 6:00 German Buba Monthly Report

*All release times are DST

*Key events are in bold

 

DAX, Monday, September 17 at 6:35 DST

Previous Close: 12,124 Open: 12,080 Low: 12,040 High: 12,123 Close: 12,069

DAX gains ground as US-China talks boost automaker shares

The DAX index has posted considerable gains in the Thursday session. Currently, the index is at 12,116, up 0.70% on the day. On the release front, German Final CPI dipped to 0.1%, matching the forecast. The ECB releases its main refinancing rate, which is expected to remain at 0.00%. On Friday, the eurozone releases trade balance.

The ECB will set interest rates later on Thursday. With the Bank expected to maintain rates at 0.00%, investors will be focusing on the rate announcement and Mario Draghi’s press conference. The Bank is expected to lower its growth forecast due to weaker global growth and could spell out downside risks to growth. If the message is indeed on the dovish side, the euro could react with losses. Inflation in the eurozone is expected to remain steady at 1.8% in 2018 in 2019, which means that the ECB is on track to wind up its asset-purchase program in December. Any change in monetary policy will not occur before next year, and an interest rate hike is unlikely before the second half of 2019.

The DAX has touched a 1-week high on Thursday, courtesy of automobile maker shares. BMW is up 2.37% on the day, Daimler has risen 1.71% and Volkswagen his climbed 2.17%. Investors gave a thumbs-up to reports that the U.S and China have renewed trade talks, which could spell relief for the auto sector, which has been hit by the recent tariff spat between the two economic giants.

This week’s German data has looked soft, causing some concern about the health of the German economy. Earlier in the week, ZEW Economic Sentiment improved in September, but remains mired in negative territory. The indicator came in at -10.6, posting a decline for a sixth straight month. The survey press release noted that during the survey period, Turkey and Argentina saw their currencies plunge, and German industrial production was soft. On Thursday, German Final CPI dipped to 0.1%, down from 0.3% a month earlier.

Economic Calendar

Thursday (September 13)

  • 2:00 German Final CPI. Estimate 0.1%. Actual 0.1%
  • 7:45 ECB Main Refinancing Rate. Estimate 0.00%
  • 8:30 ECB Press Conference

Friday (September 14)

  • 5:00 Eurozone Trade Balance. Estimate 16.3B

*All release times are DST

*Key events are in bold

 

DAX, Thursday, September 13 at 7:05 DST

Previous Close: 12,032 Open: 12,038 Low: 12,015 High: 12,117 Close: 12,116

DAX trading sideways as eurozone inflation within expectations

The DAX index is showing little movement in the Tuesday session. Currently, the DAX is at 12,808, up 0.08% on the day. In economic news, German retail sales rebounded with a gain of 1.2%, edging above the estimate of 1.1%. In the eurozone, CPI Flash Estimate edged up to 2.1%, above the forecast of 2.1%. Core CPI Flash Estimate gained 1.2%, above the forecast of 1.1%. Eurozone Preliminary Flash GDP dipped to 0.3%, shy of the estimate of 0.4%.

As the locomotive of Europe, Germany’s economic data is closely scrutinized by investors and is a bellwether of the health of the eurozone economy. Retail sales have shown mostly declines in 2018, pointing to weak consumer spending. However, after a sharp 2.1% decline in May, there was a strong rebound in June, with a gain of 1.2%. On Monday, Preliminary CPI improved with a gain of 0.3% in July, up from 0.1% a month earlier. The reading was just shy of the forecast of 0.4%. In the eurozone, the inflation estimate for July ticked higher, but the GDP gain of 0.3% was a disappointment. The reading missed the estimate and marked the smallest gain since Q3 of 2016. The eurozone economy hit some headwinds in the first quarter, but second-quarter data has been better and the ECB remains on track to wind up its bond-purchase program at the end of the year. The massive stimulus program gets mixed marks, as the eurozone economy is in a growth stage, but inflation remains well below the ECB target of just below the 2 percent level. On Wednesday, the focus will be on manufacturing PMIs, with both Germany and the eurozone expected to show stronger expansion in the July readings.

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Economic Calendar

Tuesday (July 31)

  • 2:00 German Retail Sales. Estimate 1.1%
  • 3:55 German Unemployment Change. Estimate -10K
  • 5:00 Eurozone CPI Flash Estimate. Estimate 2.0%
  • 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%
  • 5:00 Eurozone Preliminary Flash GDP. Estimate 0.4%
  • 5:00 Eurozone Unemployment Rate. Estimate 8.3%

*All release times are DST

*Key events are in bold

DAX, Tuesday, July 31 at 7:50 DST

Previous Close: 12,798 Open: 12,798 Low: 12,738 High: 12,826 Close: 12,808

DAX ticks lower, German CPI next

The DAX index has posted slight losses in the Monday session. Currently, the DAX is at 12,845, down 0.18% on the day. On the release front, today’s key event is German Preliminary CPI, which is expected to climb to 0.4%. Investors will be keeping a close eye on Tuesday’s indicators. Germany releases retail sales and the eurozone publishes CPI and GDP reports.

The DAX had one its best weeks of the year, climbing 2.8 percent and touching its highest level since mid-June. Investors responded positively to a meeting between EU Commission President Jean-Claude Juckner and U.S. President Trump that went better than expected. The two leaders agreed to take concrete steps to eliminate tariffs and improve the trade relationship between the U.S and the EU, which has been battered in recent weeks. Most importantly, Trump agreed to hold off on threatened tariffs against European car manufacturers, which pushed car manufacturers and bank shares higher and boosted the DAX.

It was more of the same from the ECB, which maintained its monetary policy at its Thursday policy meeting. The main refinancing rate remained at 0.0%, where it has been pegged since January 2016. In a policy statement, policymakers reiterated that rates would remain at current levels “through the summer of 2019”, and “as long as necessary to boost inflation to the target of just under 2.0%. There has been some quibbling among analysts as to the exact meaning of “through the summer”, but what is clear is that the ECB plans to keep rates at a flat 0.00% after winding up its bond-purchase scheme at the end of the year. Low interest rates are bullish for stocks, and the DAX responded with gains on Thursday after the ECB statement. Still, a rate hike seems likely sometime in 2019. The exact timing of a rate increase will depend on the strength of the eurozone economy and inflation levels – if the second half of 2018 is marked by stronger growth and higher inflation, there will be pressure on the ECB to raise rates earlier rather than later in 2019.

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Economic Calendar

Monday (July 30)

  • All Day – German Preliminary CPI. Estimate 0.4%

Tuesday (July 31)

  • 2:00 German Retail Sales. Estimate 1.1%
  • 3:55 German Unemployment Change. Estimate -10K
  • 5:00 Eurozone CPI Flash Estimate. Estimate 2.0%
  • 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%
  • 5:00 Eurozone Preliminary Flash GDP. Estimate 0.4%
  • 5:00 Eurozone Unemployment Rate. Estimate 8.3%

*All release times are DST

*Key events are in bold

DAX, Monday, July 30 at 7:10 DST

Previous Close: 12,860 Open: 12,820 Low: 12,814 High: 12,849 Close: 12,845

DAX climbs to 5-week highs as ECB says no rate hikes on horizon

The DAX index is slightly higher in the Friday session, continuing the upward trend seen on Thursday. Currently, the DAX is at 12,844, up 0.27% on the day. On the release front, the sole event is German Import Prices. The indicator dropped 0.5% in June, down sharply from the 1.6% gain a month earlier. Still, this beat the estimate of 0.5%. The U.S will release Advance GDP for Q2, with the markets expecting a strong gain of 4.2%.

It was more of the same from the ECB, which maintained its monetary policy at its Thursday policy meeting. The main refinancing rate remained at 0.0%, where it has been pegged since January 2016. In a policy statement, policymakers reiterated that rates would remain at current levels “through the summer of 2019”, and “as long as necessary to boost inflation to the target of just under 2.0%. There has been some quibbling among analysts as to the exact meaning of “through the summer”, but what is clear is that the ECB plans to keep rates at a flat 0.00% after winding up its bond-purchase scheme at the end of the year. Low interest rates are bullish for stocks, and the DAX responded with gains on Thursday after the ECB statement. Still, a rate hike seems likely sometime in 2019. The exact timing of a rate increase will depend on the strength of the eurozone economy and inflation levels – if the second half of 2018 is marked by stronger growth and higher inflation, there will be pressure on the ECB to raise rates earlier rather than later in 2019.

It’s been an excellent week for the DAX, which has climbed 2.6% and is at its highest level since mid-June. Market sentiment improved on Thursday on Wednesday, after a meeting between EU Commission President Jean-Claude Juckner met with President Trump went better than expected. The two leaders agreed to take concrete steps to eliminate tariffs and improve the trade relationship between the U.S and the EU, which has been battered in recent weeks. President Trump agreed to hold back on any further tariffs while talks are ongoing. This is a major concession from Trump, who just last week had threatened to impose tariffs on European car imports. U.S tariffs on European aluminum and steel will remain in place, but Juckner pointed out that the U.S has agreed to reassess these measures. The surprise agreement triggered strong gains in bank and automakers shares on the DAX, boosting the index. With fears of a full-blown transatlantic trade war easing, the markets are hoping that the conciliatory tone shown by the Trump administration with the Europeans will extend to China as well.

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Economic Calendar

Friday (July 27)

  • 2:00 German Import Prices. Estimate 0.3%. Actual 0.5%
  • 8:30 US Advance GDP. Estimate 4.2%

*All release times are DST

*Key events are in bold

 

DAX, Friday, July 27 at 5:10 DST

Previous Close: 12,809 Open: 12,823 Low: 12,816 High: 12,855 Close: 12,844

DAX jumps on Trump-Juckner agreement

The DAX index has posted strong gains in the Thursday session. Currently, the DAX is at 12,722, up 1.12% on the day. On the release front, German GfK Consumer Climate edged lower to 10.6, just shy of the estimate of 10.7 points. Later in the day, the ECB sets its minimum bid rate, followed by a rate conference with ECB President Mario Draghi.

Trade tensions between the U.S and the European Union have cast a pall over relations between the sides, so the success of EU Commission President Jean-Claude Juckner’s visit to the White House was welcome news. The parties announced on Wednesday that they had agreed to hold off on any further tariffs while talks are ongoing. This is a major concession from Trump, who had threatened to impose tariffs on European car imports. U.S tariffs on European aluminum and steel will remain in place, but Juckner pointed out that the U.S has agreed to reassess these measures. The news boosted the DAX index, as automaker shares have jumped. BMW has climbed 3.20%, Daimler is up 2.80% and Volkswagen has risen 3.53%. Bank shares are also higher, with Commerzbank up 1.46% and Deutsche Bank up 1.73%.

The markets are not expecting anything dramatic from ECB policymakers, with interest rates expected to remain at 0.00%. In June, the ECB decided to end its massive bond-purchase scheme by the end of the year, which has amounted to some 2.6 trillion euros. However, the ECB is playing it very cautious regarding any interest rate hikes, with the ECB saying it would maintain record-low rates “through the summer” of 2019. Trade tensions between the EU and U.S have dampened growth forecasts for the eurozone, although the Juckner-Trump meeting has considerably improved market sentiment. The ECB could tweak its guidance but is unlikely to make any changes to current monetary policy.

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Economic Calendar

Thursday (July 26)

  • 2:00 German GfK Consumer Climate. Estimate 10.7. Actual 10.6
  • 7:45 ECB Main Refinancing Rate. Estimate 0.00%
  • 8:30 ECB Press Conference

*All release times are DST

*Key events are in bold

 

DAX, Thursday, July 26 at 7:25 DST

Previous Close: 12,579 Open: 12,705 Low: 12,696 High: 12,778 Close: 12,722

DAX slips as markets eye EU-US trade talks

The DAX index has lost ground in the Wednesday session. Currently, the DAX is at 12,627, down 0.50% on the day. On the release front, German Ifo Business Climate ticked lower to 101.7, just above the estimate of 101.6 points. On Thursday, Germany releases GfK Consumer Climate and the ECB will set its minimum bid rate.

Tit-for-tat tariffs between the U.S and the EU has seen the trade relationship between them reach a low point. More tariffs could be coming, as the EU has vowed to impose $20 billion in tariffs on U.S products if the Trump administration slaps $50 billion on European goods. Will the nasty trade war worsen or will the sides pull back? There could be important developments on Wednesday, as an EU delegation led by European Commission President John-Claude Juckner meets with President Trump at the White House on Wednesday. If the sides can make progress on car tariffs, automaker shares could jump and boost the DAX.

With the global tariff war threatening to hurt German and eurozone exports, investors have been keeping a close eye on manufacturing data. There was positive news on Tuesday, as Eurozone and German manufacturing PMIs continue to point to expansion. The German release improved to 57.3, easily beating the estimate of 55.5, while the eurozone reading of 55.1 was above the forecast of 54.7. Both indicators had dropped over six consecutive months and the July releases put an end to that nasty streak.  Services PMIs were not as strong, as the German and eurozone releases missed their estimates.

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Economic Calendar

Wednesday (July 25)

  • 4:00 German Ifo Business Climate. Estimate 101.6. Actual 101.7
  • 4:00 Eurozone Money Supply. Estimate 4.0%. Actual 4.4%
  • 4:00 Eurozone Private Loans. Estimate 3.0%. Actual 2.9%

Thursday (July 26)

  • 2:00 German GfK Consumer Climate. Estimate 10.7
  • 7:45 ECB Main Refinancing Rate. Estimate 0.00%
  • 8:30 ECB Press Conference

*All release times are DST

*Key events are in bold

DAX, Wednesday, July 25 at 6:55 DST

Previous Close: 12,689 Open: 12,678 Low: 12,623 High: 12,693 Close: 12,627