DAX loses ground as German service sector slows

The DAX index has edged lower in the Tuesday session. Currently, the DAX is trading at 11,469, down 0.34% on the day. On the release front, Germany and eurozone services PMIs both beat their estimates and pointed to expansion. Eurozone PPI improved to 0.5%, beating the estimate of 0.4%. In the U.S, all eyes will be on the U.S midterm congressional elections. On Wednesday, Germany releases industrial production and the eurozone publishes retail sales.

German indicators were lukewarm on Tuesday. Factory orders posted a gain of 0.3% in September, easily beating the forecast of -0.4%. Still, this was a significant drop from the August reading of 2.0%. The trend was similar in the services sector, as Final Services PMI dropped from 55.9 to 54.7 in October, marking a 3-month low. The reading did, however, beat the forecast of 53.6.  On Monday, Sentix investor confidence pointed to a sharp drop. The indicator fell from 11.4 to 8.8 points, its lowest level since October 2016. The index has dropped sharply in 2018 – early in the year, the index was above the 30-point level. The eurozone economy slowed to 1.7% in the third quarter, down from 2.2% in the second quarter. There are concerns that the slowdown will continue into Q4, which could weigh heavily on European stock markets.

The markets are keeping a close eye on the U.S mid-term elections, as voters go to the polls on Tuesday. Many analysts are calling the election a referendum on the presidency of Donald Trump, who has presided over a red-hot economy but has also alienated many voters with his controversial policies on health care and immigration. There are a host of races that are too close to call, but most analysts expect the Democrats to narrowly win the House while the Republicans will hold onto their majority in the Senate. Traders should expect some volatility in the global equity markets once the election results are announced.

OANDA European open – US midterms drive caution

Election time

Economic Calendar

Tuesday (November 6)

  • 2:00 German Factory Orders. Estimate -0.4%. Actual 0.3%
  • 3:55 German Final Services PMI. Estimate 53.6. Actual 54.7
  • 4:00 Eurozone Final Services PMI. Estimate 53.3. Actual 53.7
  • 5:00 Eurozone PPI. Estimate 0.4%. Actual 0.5%
  • All Day  – US Congressional Elections

Wednesday (November 7)

  • 2:00 German Industrial Production. Estimate -0.1%
  • 5:00 Eurozone Retail Sales. Estimate 0.1%
  • Tentative – German 10-year Bond Auction

*All release times are EST

*Key events are in bold

DAX, Tuesday, November 6 at 6:40 DST

Open: 11,508 Low: 11,549 High: 11,436 Close: 11,469

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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