The DAX has ticked higher in the Thursday session. Currently, the DAX is at 12,847, up 0.13% on the day. In economic news, German Factory Orders plunged 2.5%, missing the estimate of 0.7%. In the eurozone, Revised GDP dipped to 0.4%, matching the estimate.
The eurozone economy has been performing well and inflation continues to move higher, raising the question of what’s next for the ECB stimulus program. The ECB currently buys EUR 30 billion each month, and the scheme is scheduled to end in September. The bank has extended the program in the past, but stronger economic conditions have strengthened the case to finally end stimulus. The ECB has not formally discussed the issue, leaving the markets to hunt for any clues about the bank’s plans. On Wednesday, ECB chief economist Peter Praet said that the ECB would commence discussing the issue next week, when the Governing Council meets in Riga, Latvia. Many policymakers favor a gradual reduction in stimulus over several months, rather than completely turning off the tap in September. If the ECB makes any announcements regarding further tapering, we could see some volatility from European stock markets.
Canada will host the leaders of the Group of 7, starting on Friday. These meetings usually do not make the headlines, but this meeting could be explosive, with plenty of bad will between six of the members and President Trump. The reason? The renewal of the tariff spat, courtesy of the U.S slapping aluminum and steel tariffs on the European Union and Canada. Last week, finance ministers from six members of the G-7 were united in their criticism of US Treasury Secretary Steve Mnuchin over the brewing trade war. Will we see a higher profile, repeat performance at this meeting? Canada and Mexico have already announced retaliatory duties on U.S products. The escalating trade battle is sure to dominate the summit, and if the leaders fail to resolve matters, the result could be a nasty trade war between the U.S and its major trading partners.
Thursday (June 7)
- 2:00 German Factory Orders. Estimate 0.7%. Actual -2.5%
Friday (June 8)
- 2:00 German Industrial Production. Estimate 0.4%
- 2:00 German Trade Balance. Estimate 20.3B
- Day 1 – G7 Meetings
*All release times are DST
*Key events are in bold
DAX, Thursday, June 7 at 6:55 DST
Previous Close: 12,830 Open: 12,874 Low: 12,840 High: 12,916 Close: 12,847
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