The DAX has rebounded on Friday, after posting sharp losses on Thursday. Currently, the index is at 12,053, up 0.85% on the day. On the release front, it’s quiet end to the week, with no German or eurozone events. It is Day 2 of the European election, with results to be published on Sunday night, after all EU members have voted.
On Thursday, the DAX posted sharp losses, as investors reacted to a weak German business confidence report. Ifo Business Climate slowed to 97.9, shy of the estimate of 99.2. This was the weakest score since January 2010. Germany and the eurozone are gripped in a slowdown, and this has dampened business confidence.
German PMI scores dropped in April, as the German locomotive has lost a gear. Manufacturing PMI dropped to 44.3, marking a fifth straight contraction. Although services PMI continue to point to expansion, the May release disappointed, dropping from 55.6 to 55.2 and missing the forecast of 55.0 points. The manufacturing sector has been hit hard by the global trade war, and the German economy, the largest in the eurozone, managed just a 0.4% gain in the first quarter.
Trade tensions between the U.S. and China remain a key concern for investors. China has reacted angrily to U.S. sanctions on Huawei and has suspended trade talks with the U.S. The spike in tensions weighed on global stock markets, and the DAX plunged 1.8%, its sharpest drop since early February. The index has reversed directions on Friday, and traders should be prepared for further swings in the markets next week.
Economic Calendar
Friday (May 24)
- Day 2 – European Parliamentary Elections
*All release times are DST
*Key events are in bold
DAX, Friday, May 24 at 6:45 DST
Previous Close: 12,168 Open: 12,060 Low: 11,925 High: 12,079 Close: 12,053