DAX Steady but Trump Concerns Remain

The DAX index has ticked lower in the Monday session. Currently, the DAX is trading at 12,596.50. On the release front, it’s a quiet start to the week, with no economic events on the schedule. There are a host of events on Tuesday, highlighted by Manufacturing PMIs in Germany and the eurozone, as well as German Ifo Business Climate.

The political turmoil in Washington has had a chilling effect on global stock markets. The DAX dropped 1.4% last week, as nervous investors have sought out safe-haven assets such as gold and the Japanese yen. Will the downward spiral in the stock markets continue? If the crisis atmosphere in Washington continues, stocks could be headed lower. It’s been a rocky few months for President Trump, but last week was perhaps his most difficult since taking office. Trump’s administration was rocked by reports that he had asked former FBI director James Comey to end an investigation into connections between Russia and the Trump campaign team during the US election. If these accusations are true, Trump could be charged with committing obstruction of justice. President Trump fired back on Thursday, angrily denouncing this move as a “witch hunt”. The media and the Democrats have had a field day with Trump’s woes, and many Republicans are expressing unease with an administration that appears rudderless and is staggering from crisis to crisis.

The markets are keeping a close eye on Monday’s meeting of EU finance ministers, which will be discussing Greece’s debt. Greece has undergone a severe austerity plan and understandably, the Greek government is reluctant to adopt further painful measures. However, Greece could be headed on a collision course with the EU, if the latter insists that the further reforms are needed. German Finance Minister Wolfgang Schaeuble praised the reforms implemented by Greece as “remarkable”, but insisted that Greece must take further steps before the EU provides further financial aid. Greek’s debt woes once resulted in the country almost leaving the eurozone, and if the EU holds up aid, European stock markets could drop sharply.

Economic Calendar

Monday (May 23)

• 6:00 German Buba Monthly Report
• All Day – Eurogroup Meetings

Tuesday (May 24)

• 2:00 German Final GDP. Estimate 0.6%
• 3:30 German Flash Manufacturing PMI. Estimate 58.0
• 3:30 German Flash Services PMI. Estimate 55.5
• 4:00 German Ifo Business Climate. Estimate 113.1
• 4:00 Eurozone Flash Manufacturing PMI. Estimate 56.5
• 4:00 Eurozone Flash Services PMI. Estimate 56.5

*All release times are EDT

*Key events are in bold

DAX, Monday, May 22 at 8:15 EDT

Open: 12,650.50 High: 12,665.00 Low: 12,567.00 Close: 12,577.75

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