The DAX had a quiet week, spending most of it close to the symbolic 13,000 level. In the Monday session, the index is at 13,051.00, up 0.46% since the Friday close. On the release front, the sole economic indicator is Eurozone Consumer Confidence, which is expected to remain to remain at -1 point. On Tuesday, Germany and the eurozone will release Manufacturing PMIs.
What’s next for Catalonia? On Saturday, the central government said it was imposing direct rule, invoking Article 155 of the Spanish Constitution. However, there is plenty of uncertainty, as this clause has never been used and it is unclear what steps Madrid will take. Spanish media is reporting that the central government will strip Catalan President Carles Puigdemont of all his powers and take over Catalonia’s local police force. Unsurprisingly, the Catalan government has condemned Madrid and said it will not accept direct rule. The crisis has led to many companies in Catalonia moving their legal headquarters to Madrid, and investors are nervously watching as developments unfold in Spain, which is the eurozone’s fourth largest economy. The Spanish stock market has started the week with losses, but this has not weighed on other European stock markets.
German politicians are busy conducting coalition negotiations, which could continue until the end of the year. The current talks are especially complex, because Chancellor Angela Merkel will have to rely on two other parties to form a government. The FDP, a pro-business party, is expected to be in the coalition. On the weekend, the head of the party, Christian Lindner, said that the governments should close tax loopholes for large companies such as Apple. This comment raised some eyebrows among investors, as the FDP has been a strong proponent of tax cuts. Traders should keep an eye on the coalition negotiations, as the makeup of the new government could have a substantial impact on the German stock markets.
Monday (October 23)
- 6:00 German Buba Monthly Report
- Tentative – Eurozone Consumer Confidence. Estimate -1
Tuesday (October 24)
- 3:30 German Flash Manufacturing PMI. Estimate 60.1
- 3:30 German Flash Services PMI. Estimate 55.5
- 4:00 Eurozone Flash Manufacturing PMI. Estimate 57.9
- 4:00 Eurozone Flash Services PMI. Estimate 55.7
*All release times are GMT
*Key events are in bold
DAX, Monday, October 23 at 6:50 EDT
Open: 13,014.50 High: 13,069.50 Low: 12,973.00 Close: 13,051.00
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