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DAX under pressure as investors fret over trade tensions

The DAX index has posted gains in the Thursday session. Currently, the DAX is at 12,614, down 0.65% on the day. On the release front, the sole eurozone indicator is consumer confidence, which is expected to remain pegged at zero for a fifth straight month. On Friday, Germany and the eurozone will release services and manufacturing PMI reports.

The U.S-China trade war has been dominating the headlines, overshadowing escalating trade tensions between the U.S and the European Union. President Trump recently slapped import tariffs on steel and aluminum imports from the European Union, triggering retaliatory tariffs from Brussels. The eurozone economy is performing relatively well, so much so that the ECB has announced it is winding up its asset-purchase program at the end of the year. The eurozone can ill-afford a trade war with the United States, which would hurt exports, particularly from Germany. Investors are increasingly nervous about the trade war rhetoric, which is weighing on global equity markets. The DAX index has declined 2.6% this week and is at its lowest level since May 31.

Mario Draghi preached a lesson on prudence and patience from the ECB Forum on Tuesday. Last week, the ECB announced that it was winding up its asset-purchase plan by the end of the year, but added that it would not raise interest rates before next summer. This dovish message sent the euro sharply lower. Draghi said that the ECB will be “patient in determining the timing of the first rate rise”. Draghi also made reference to inflation, saying that “inflation expectations remain well anchored”. However, analysts were quick to note that eurozone inflation has fallen short of the bank’s target of just below 2 percent for five years. Draghi acknowledged that there were external factors which could weigh on inflation, including the threat of global protectionism and higher oil prices. There is also the vexing problem that higher wages have failed to translate into increased inflation.

  (Update 1) Onwards and Upwards [1]

  Oil falls -2% as OPEC nears deal to raise production [2]

Thursday (June 21)

Friday (June 22)

*All release times are DST

*Key events are in bold


DAX, Thursday, June 21 at 7:05 DST

Previous Close: 12,695 Open: 12,698 Low: 12,555 High: 12,719 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 [6]

Market Analyst at OANDA [7]
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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