The DAX index has recorded considerable losses in the Tuesday session. Currently, the DAX is at 11,388, down 0.67% since the Monday close. On the release front, Eurozone PPI climbed to 0.8%, above the estimate of 0.5%. On Wednesday, ECB President Mario Draghi will speak at a banking conference in Frankfurt. Germany and the eurozone will release Services PMIs and we’ll also get a look at eurozone retail sales.
The DAX started the week with sharp gains, after the U.S. and China agreed to a truce in the tariff war. At the G-20 summit, President Trump and Chinese President Xi Jinping agreed to suspend any further tariff moves until March 1. Trump had threatened to raise tariffs on all Chinese products from 10 percent to 25 percent on December 1, and news of the suspension between the world’s two largest economies triggered sharp rises in the equity markets. However, the optimism proved to be short-lived, as the DAX ended the Monday session with considerable losses. The downward trend has continued on Tuesday, as investors are concerned that the 90-day reprieve may not lead to a long-term agreement over tariffs. The sides remain far apart on a number of issues, including repeated charges by the U.S. that China is engaged in theft of U.S. intellectual property. The markets have been very sensitive to the trade dispute, and the upcoming negotiations between the U.S. and China, with the likely ups-and-downs, promise to have a significant effect on market movement.
German indicators continue to struggle in the fourth quarter, raising concerns among analysts. Last week, GfK Consumer Climate dipped to an 18-month low and retail sales fell by 0.3%, its first decline since July. Consumers are holding tighter to the purse strings, which is hurting economic growth. The downward trend continued on Monday, as Manufacturing PMI dropped to 51.8 in November, down from 52.2 points in October. This marked a fourth straight downturn and was the lowest reading since April 2016. The global trade war has taken a bite out of German exports and a slowdown in the eurozone economy has dampened manufacturing growth in Germany. This does not bode well for the eurozone economy, as the German economy is often a bellwether for the rest of the eurozone.
Economic Calendar
Tuesday (December 4)
- 5:00 Eurozone PPI. Estimate 0.5%. Actual 0.8%
*All release times are DST
*Key events are in bold
DAX, Tuesday, December 4 at 6:35 EST
Open: 11,429 Low: 11,442 High: 11,369 Close: 11,388