DAX Retracts After Punching Past 13,000

The DAX index is lower on Friday, erasing the gains which marked the Thursday session. Currently, the DAX is at 12,988 points, down 0.27% on the day. On the release front, ECB President Mario Draghi will speak at an event in Florence.

French and German stock markets remain strong and continue to move upwards. On Thursday, the DAX pushed above the symbolic 13,000 level for the first time since late January. The index is poised to record a seventh straight winning week. The CAC is looking even more impressive, jumping 8.2% since late March.

The ECB continues to send a message of cautious optimism to the markets, and this was underscored by the ECB Economic Bulletin. The report stated that the eurozone economy continues to show “solid and broad-based expansion” but did acknowledge that growth in the first quarter slowed. As for inflation, policymakers remain confident that inflation will continue to move towards the inflation target of 2 percent. However, inflation remains subdued and has not shown signs of an upward trend. The report reaffirmed that the ECB plans to maintain interest rates at current levels for an “extended period of time, and well past the horizon of the net asset purchases.”

In the US, inflation levels remain low as the Federal Reserve target of 2 percent remains elusive. CPI rebounded with a gain of 0.2%, but this fell short of the estimate of 0.3%. Core CPI edged lower to 0.1%, shy of the forecast of 0.2%. Inflation levels will be an important factor for the Fed in its monetary policy projection, which remains at two more hikes in 2018. According to the CME Group, the odds that the Fed will press the rate trigger at the June meeting stand at 100%.

Economic Fundamentals

Friday (May 11)

• 9:15 ECB President Mario Draghi Speaks

*All release times are DST

*Key events are in bold

DAX, Friday, May 11 at 6:05 DST

Prev. Close: 13,022 Open: 13,022 Low: 12,965 High: 13,031 Close: 12,988

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