DAX dips to 11-week low as trade row spooks investors

The DAX index continues to lose ground this week. In Tuesday’s North American session, the DAX is at 12,234, down 0.29% on the day. Earlier on Tuesday, the DAX slipped to 12,188, its lowest level since early April. There are no German or eurozone events on the schedule.

It continues to be a rough June for the DAX, which has slipped 3.5 percent. European equity markets remain under pressure, as investors cast a nervous eye on the escalating trade tariff between the U.S and its major trading partners. On Friday, the EU slapped retaliatory tariffs of some 25% on $3.3 billion of U.S goods. This move was in response to U.S tariffs on EU steel and aluminum imports. However, President Trump has more cards up his sleeves and has threatened to impose 20% tariffs on EU vehicles. This threat has sent automobile stocks on the DAX sharply lower on Monday. Daimler is down 2.29% and BMW has fallen 1.49%. On Thursday, Daimler said that trade tensions would affect its sales. BMW exports cars from the U.S to China and Europe, so the trade battles could have a negative impact on the company’s revenues. Later this week, the U.S Treasury Department is expected to announce restrictions on Chinese investment in the U.S, as part of the government’s efforts to curtail alleged intellectual property theft by the Chinese. This would mark a significant escalation of the trade battle with China, and a strong Chinese response could shake up the fragile global stock markets.

Major central bankers have expressed alarm at the recent protectionist moves, and the Bank of International Settlements (BIS), an umbrella group for 60 central banks, weighed in on the crisis on Sunday. The BIS said that a global trading war is putting growth and financial stability at risk, and also warned that this could have negative side effects on the currency markets. At the same time, the BIS expressed support for the Federal Reserve raising interest rates gradually and for the ECB heading towards normalization as it winds up its massive asset program.

Economic Calendar

Tuesday (June 26)

  • There are no German or eurozone events

*All release times are DST

*Key events are in bold

DAX, Tuesday, June 26 at 14:50 DST

Previous Close: 12,234 Open: 12,347 Low: 12,188 High: 12,355 Close: 12,234

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.