DAX Soars as US-China Tariff Tensions Ease

The DAX index has posted sharp gains in the Tuesday session. Currently, the DAX is trading at 11,199 points, up 1.80% on the day. In economic news, China has filed applications with the World Trade Organization with regard to US tariffs on Chinese imports. German Import Prices declined 0.6%, weaker than the estimate of -0.3%. This marked the first decline since July. On Wednesday, Germany GfK Consumer Climate and the US publishes Final GDP.

Global stock markets have jumped on the news that China and the US are trying to resolve the tariff dispute amicably, rather than with tit-for-tat tariffs. US markets ended the Monday session with strong gains, and European stock markets have followed suit on Tuesday. The DAX has also posted sharp gains, and all but one of the listings on the index are in green territory. Commerzsbank is up 1.52% and Deutsche Bank has gained 1.33% on the day.

China has filed applications with the WTO, objecting to the US claim the tariffs were imposed on national security grounds. Rather, China says that the US simply applied trade restrictions in order to protect domestic steel producers. Last week, President Trump announced that the US would impose tariffs on up to $60 billion worth of Chinese imports, and China has threatened to retaliate. These moves sent the markets lower, as the specter of a downturn in the Chinese economy and the possibility of a global recession weighed on investor risk appetite.

The ECB will stay the course with regard to its stimulus program, according to a senior ECB policymaker. Governing Council member Erkki Liikanen said on Tuesday that although eurozone growth remains robust, inflation could remain lower than expected. With the current bond purchase program set to expire in September, there is speculation that the ECB will wind up the program, after years of pursuing an accommodative policy. If inflation does move closer to the ECB’s target of around 2 percent, there is a greater likelihood that the bank will not extend stimulus, and could entertain raising interest rates in 2018.

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Economic Calendar

 Tuesday (March 27)

• 2:00 German Import Prices. Estimate -0.3%. Actual -0.6%
• 4:00 Eurozone M3 Money Supply. Estimate 4.6%. Actual 4.2%
• 4:00 Eurozone Private Loans. Estimate 3.0%. Actual 2.9%

 Wednesday (March 28)

• 2:00 German GfK Consumer Climate. Estimate 10.7
• 8:30 US Final GDP. Estimate 2.7%

*All release times are DST

*Key events are in bold

DAX, Tuesday, March 27 at 7:20 EDT

Prev. Close: 11,886 Open: 11,934 High: 11,973 Low: 11,891 Close: 11,999

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