The DAX has posted small gains in the Monday session. Currently, the index is at 13,013.50, up 0.17% on the day. On the release front, eurozone data was positive. German Wholesale Price Index gained 0.6%, above the forecast of 0.4%. The eurozone trade surplus jumped to EUR 21.6 billion, above the estimate of EUR 20.3 billion. On Tuesday, Germany releases ZEW Economic Sentiment and the eurozone will publish Final CPI.
Last week, ECB President Mario Draghi appeared to pour cold water on hopes that the ECB would raise interest rates in the near future. Draghi stated that he plans to maintain ultra-low rates “well past” the end of the ECB’s bond-buying program in December. The ECB has been under pressure to tighten monetary policy, primarily from Germany, where the central bank has called for tighter policy, given the stronger eurozone economy. The ECB is expected to taper its monthly bond purchases of 60 billion euros at the October policy meeting, but Draghi has sent out a clear message that rate hikes will have to wait until 2018. With inflation levels will below the ECB target of around 2 percent, Draghi has been reluctant to raise interest rates until inflation shows clear signs of moving upwards.
The crisis in Catalonia continues this week, with no resolution in sight. Last week, the Spanish government set a Monday deadline for Catalan President Carles Puigdemont to expressly state whether he had declared independence, and if so, Puigemont was given three more days to retract his proclamation. However, the Catalan President shirked away from a clear answer and let the first deadline pass, calling for more dialogue with Madrid. Prime Minister Mariano Rajoy has threatened to suspend the Catalan parliament and impose direct rule from Madrid, which could trigger a violent response. The crisis has led 500 companies to start leaving Catalonia, and the Standard and Poor’s rating agency has said that the region could face a recession if the crisis continues.
Monday (October 16)
- 2:00 German WPI. Estimate 0.4%. Actual 0.6%
- 5:00 Eurozone Trade Balance. Estimate 20.3B. Actual 21.6B
Tuesday (October 17)
- 5:00 German ZEW Economic Sentiment. Estimate 20.3
- 6:00 Eurozone Final CPI. Estimate 1.5%
*All release times are GMT
*Key events are in bold
DAX, Monday, October 16 at 8:10 EDT
Open: 12,966.25 High: 13,003.00 Low: 12,979.50 Close: 12,992.25
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