DAX steady but investors tense as U.S tariffs kick in

The DAX index is unchanged in the Friday session, after posting strong gains on Thursday. Currently, the DAX is at 12,455, down 0.07% on the day. On the release front, German Industrial Production jumped 2.6%, well above the estimate of 0.3%. In the U.S, the markets are braced for a soft Nonfarm Payrolls report, which is expected to drop to 195 thousand.

German industrial numbers continue to impress this week. On Thursday, Factory Orders jumped 2.6%, marking a five-month high. This was followed by Industrial Production, which climbed 2.6%, its sharpest gain in 2018. There is growing concern that protectionist moves by both the U.S and the EU could take a toll on exports and the manufacturing sectors, so these strong readings are welcome news.

Trade tensions between China and the U.S will be in focus on Friday, as U.S tariffs on $34 billion in Chinese products took effect earlier in the day. On its own, the U.S move will have a marginal effect on trade, but investors are nervous that the Chinese will retaliate, and President Trump could fire back. Both the U.S and China have shown no signs of backing down, and Trump recently threatened to slap tariffs on some $500 billion in Chinese imports, underscoring that this tariff battle could easily deteriorate into an all-out trade war and trigger a global recession. European officials will be anxiously watching these developments, as Trump has threatened to impose tariffs of 20 percent on European auto imports if the EU does not remove their tariffs on U.S automobiles. The EU would clearly prefer not to engage in a full-blown tariff war with the United States and on Thursday, there was a report that European officials are examining the possibility of a tariff-cutting agreement between the world’s largest car exporters. Investors gave this news a thumbs-up, and sharp gains in auto manufacturing shares boosted the DAX on Thursday.

  The trade war is finally upon us

  Wait-and-see as tariffs and payrolls loom

Economic Calendar

Friday (July 6)

  • 2:00 German Industrial Production. Estimate 0.3%. Actual 2.6%
  • 8:30 US Nonfarm Employment Change. Estimate 195K

*All release times are DST

*Key events are in bold

DAX, Friday, July 6 at 4:55 DST

Previous Close: 12,464 Open: 12,505 Low: 12,453 High: 12,509 Close: 12,455

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

Market Analyst at OANDA
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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