DAX slides as trade tensions spook equity markets

The DAX index has posted sharp losses in the Wednesday session. Currently, the DAX is at 12,457, down 1.21% on the day. On the release front, there are no major German or European events. ECB President Mario Draghi spoke at an event in Frankfurt but did not comment on monetary policy. On Thursday, Germany releases Final CPI and the ECB publishes its minutes from the June policy meeting.

Global markets are seeing red on Wednesday, as investors remain uneasy about the tariff battle being waged between the U.S and its major trading partners, particularly China. After the U.S and China imposed tariffs on each other of some $30 billion, the Trump administration has raised the ante, threatening to hit China with further tariffs on $200 billion worth of Chinese goods. China cannot retaliate in kind, since it does not import that amount of goods from the U.S. Still, the Chinese can take steps which will make it more difficult for U.S companies to do business in China. President Trump’s presence at the NATO summit will not bolster investor confidence, as Trump has lashed out at Germany and other NATO members for not paying their fair share in defense spending.

The eurozone could be headed into headwinds in the second half of 2018, according to the well-respected ZEW Economic Sentiment indicators. The German and eurozone releases both dropped to their lowest levels since August 2012. The surveys indicate the views of financial experts, who are clearly concerned about the economic outlook for the next six months. Internal divisions over migration and fears over a full-blown global trade war have investors worried that the eurozone outlook could worsen, which would likely send European equity markets to lower ground.

  Investors turn risk-averse on tariff war escalation

  ( Update 1) When the going gets tough, the tough get going

Economic Calendar

Wednesday (July 11)

  • 3:00 ECB President Mario Draghi Speaks
  • Tentative – German 10-year Bond Auction. Actual 0.36/1.6

Thursday (July 12)

  • 2:00 German Final CPI. Estimate 0.1%
  • 5:00 Eurozone Industrial Production. Estimate 1.2%
  • All Day – Eurogroup Meetings
  • 7:30 ECB Monetary Policy Meeting Accounts

*All release times are DST

*Key events are in bold

DAX, Wednesday, July 11 at 7:05 DST

Previous Close: 12,609 Open: 12,504 Low: 12,428 High: 12,515 Close: 12,457

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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