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DAX plunges to 3-week low on US-China trade spat

The DAX index remains under pressure in the Tuesday session. Currently, the DAX is at 12,614, down 1.71% since the Monday close. On the release front, the ECB Forum kicks off with a speech from ECB President Mario Draghi. In the eurozone, the current account surplus narrowed for a third straight month, dropping to EUR 28.4 billion. This fell short of the estimate of EUR 30.3 billion. On Wednesday, Mario Draghi and Fed Chair Jerome Powell will participate in a panel at the European Forum. Germany will release the Producer Price Index.

It has been a rough start to the week for German stock markets, and the DAX index has lost 2.1% percent. Earlier on Tuesday, the DAX fell to its lowest level since May 31. Investors have reacted negatively to the escalating trade war between China and the U.S, as fears of global trade war have increased. The U.S announced a 25 percent tariff on $50 billion in Chinese goods on Friday. After China responded with an identical move on U.S. imports, President Trump has now threatened to impose 10 percent tariffs on some $200 billion in Chinese goods. Not surprisingly, China has threatened to retaliate to this latest move. Trump has vowed to take action on the $375 billion trade deficit that the U.S has with China, claiming that the latter is guilty of unfair trade practices. With the first of the U.S tariffs scheduled to take effect on July 6 and no signs that any side will blink first, the markets should be preparing for stormy weather ahead. It will be interesting to see if central bank heads Draghi and Powell address the tariff spat on Wednesday at the ECB Forum.

  ( UPDATE 1) World Cup effect weighing on volumes [1]

Tuesday (June 19)

Wednesday (June 20)

*All release times are DST

*Key events are in bold

DAX, Tuesday, June 19 at 7:30 DST

Previous Close: 12,834 Open: 12,678 Low: 12,593 High: 12,686 Close: 12,614

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher [5]

Market Analyst at OANDA [6]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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