DAX Slides as US Tariffs on China Spook Markets

The DAX index has recorded sharp losses for a second straight session. In the Friday session, the DAX is trading at 11,912 points, down 1.55% on the day. On the release front, there are no German or eurozone releases on the calendar.

It’s been a tough week for global stock markets, and the DAX has not been immune to the tumble. The DAX has shed 3.5% percent of its value this week, as investor risk appetite has waned after US President Trump slapped 25% tariffs on up to $60 billion worth of Chinese imports on Thursday. Trump said that the tariffs, which will take effect within 15 days, are needed to address the massive trade deficit with China, which stands at $375 billion. For its part, China wasted no time in threatening to retaliate, saying it was planning to impose tariffs on 128 US products, which amounted to $3 billion in imports. The tariffs directed against China come on the heels of tariffs on steel imports coming into the US, although the US has promised exemptions to the EU and other trading partners. There is serious concern that these moves could ignite a global trade war, and a downturn in the Chinese economy could spread and cause a global recession. Predictably, US stock markets were down sharply on Thursday, and the gloom has spread to European stock markets in the Friday session.

The German business sector continues to have strong confidence in the German economy, but there is concern about possible headwinds due to recent tariffs imposed by the Trump administration. The German Ifo Business Climate report dipped to 114.7 in March, which matched the forecast. However, this marked a second straight drop, and was the lowest reading in 11 months. The report attributed lower business morale to concerns that tariffs could hurt transatlantic trade, as well as the negative impact of a stronger euro. On the bright side, tax reform in the US and the economic rebound in the eurozone have increased the demand for German goods and services.

China is not backing down, and why should they ?

Trade War Taking its Toll on Markets

Economic Calendar

  • There are no German or eurozone events

*All release times are DST

*Key events are in bold

 

DAX, Friday, March 23 at 6:45 EDT

Prev. Close: 12,100 Open: 11,991 High: 12,002 Low: 11,823 Close: 11,912

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.