The DAX index has posted gains in the Tuesday session, and is up 0.55 percent. The index is currently at 12,757.75 points. On the release front, German ZEW Economic Sentiment dipped to 18.6, missing the forecast of 21.6 points. However, Eurozone ZEW Economic Sentiment improved to 37.7, beating the estimate of 37.2 points. On Wednesday, Germany releases Final CPI, and the Eurozone publishes Employment Change and Industrial Production. In the US, it’s a busy day, with the release of retail sales and CPI. As well, the Federal Reserve is expected to increase interest rates by a quarter-point.
The DAX started the week with losses, as European stock markets reacted to sharp losses on the Nasdaq, which dropped 1.8% on the Friday session. Heavyweight technology stocks were lower, and Apple led the downturn with losses of close to 4 percent. This had a negative impact on German bank shares, as Deutsche Bank and Commerzbank both lost ground. Still, analysts expect the Nsadaq to rebound, so Monday’s losses have not raised serious concerns about the tech sector.
All eyes are on the Federal Reserve, which holds its monthly policy meeting later on Wednesday. The markets have priced in a quarter-point hike, which would be the second increase in 2017. The likelihood continues to hover around the 90% level, so it would be a shock if the Fed did not make a move. What’s in store after that? An additional rate hike seems much less likely in the third quarter, with the CME forecasting the odds of a September move at just 26%. The markets are skeptical about another rate hike in the second half, unless the political situation in Washington shows signs of stabilizing. The Trump administration remains in damage control mode, as it’s difficult to assess the damage from the dramatic evidence of ex-FBI director James Comey. The Trump administration continues to lurch from one crisis to another, and President Trump seems disconnected not just from the Democrats, but from many Republican lawmakers as well. The Fed and the markets have serious concerns with regard to Trump’s ability to move forward with his economic agenda, and this sentiment could weigh on the US dollar.
Tuesday (June 13)
- 2:00 German WPI. Estimate +0.2%. Actual -0.7%
- 5:00 German ZEW Economic Sentiment. Estimate 21.6. Actual 18.6
- 5:00 Eurozone ZEW Economic Sentiment. Estimate 37.2 Actual 37.7
Wednesday (June 14)
- 8:30 US CPI. Estimate 0.2%
- 8:30 US Retail Sales. Estimate 0.1%
- 14:00 US FOMC Statement
- 14:00 US Federal Funds Rate. Estimate <1.25%
*All release times are EDT
*Key events are in bold
DAX, Tuesday, June 13 at 7:05 EDT
Open: 12,740.50 High: 12,770.50 Low: 12,727 Close: 12,757.75