The DAX index has started the week with small losses. In the Monday session, the DAX is currently trading at 12,123.50, down 0.17% on the day. On the release front, there are no major events on the schedule. Eurozone Sentix Investor Confidence climbed to 28.2, above the forecast of 27.4 points. Eurozone PPI continues to improve, coming in at 0.0%, short of the estimate of 0.1%. On Tuesday, we’ll get a look at German Final Services, Eurozone Revised GDP and Eurozone Retail Sales.
The eurozone economy continues to accelerate, as economic indicators point upwards in the second half of 2017. The Sentix Investor Confidence rose in September, as investors and analysts like what they see from the euro-area economy. Germany, the largest economy in the bloc, continues to look very strong, but other countries such as France and Italy have also posted better numbers in 2017. In August, the German and eurozone manufacturing sectors continued to show strong expansion, buoyed by domestic demand as well as a stronger global economy which has increased demand for German and European exports. A stronger economy has raised questions as to what monetary moves the ECB has planned – will it finally taper its ultra-accommodative monetary policy? The bank’s asset purchases program is scheduled to end in December, and analysts expect the ECB to withdraw stimulus in early 2018. Still, the ECB has not provided much guidance as to its plans. ECB President Mario Draghi was mum on monetary policy at the recent meeting of central bankers at Jackson Hole, following the lead of Federal Reserve Chair Janet Yellen. However, the ECB head will not get another free pass this week, as the ECB holds its next policy meeting on Thursday. Any discussion about tapering the ECB’s asset purchase program could have a strong effect on European stock markets.
Global markets are keeping a close eye on key numbers in the US, as the guessing game continues with regard to a rate hike by the Federal Reserve. US employment numbers were unexpectedly soft on Friday, but the dollar shrugged off the weak numbers and managed to post gains against the euro. Nonfarm employment change slowed to 156 thousand, well below the estimate of 180 thousand. This marked a 3-month low. However, with the US labor market still close to capacity (the unemployment rate is just 4.4%), the markets can be forgiving over a softer nonfarm payroll report. Wage growth, or the lack of it, is a more pressing concern. Average Hourly Earnings posted a small gain of 0.1%, missing the estimate of 0.2%. This was down from 0.3% in the previous report, and matched the weakest gain seen in 2017. The lack of wage gains has impacted on inflation levels, which remain well below the Fed’s inflation target of 2%. Soft inflation has dampened enthusiasm for a final rate hike in 2017, with the odds of December increase pegged at just 37%.
Monday (September 4)
- 4:30 Eurozone Sentix Investor Confidence. Estimate 27.4. Actual 28.2
- 5:00 Eurozone PPI. Estimate 0.1%. Actual 0.0%
Tuesday (September 5)
- 3:55 German Final Services PMI. Estimate 53.4
- 4:00 Eurozone Final Services PMI. Estimate 54.9
- 5:00 Eurozone Retail Sales. Estimate -0.2%
- 5:00 Eurozone Revised GDP. Estimate 0.6%
*All release times are EDT
*Key events are in bold
DAX, Monday, September 4 at 8:20 EDT
Open: 12,044.60 High: 12,129.50 Low: 12,041.00 Close: 12,123.50