The DAX index has started the week in style, posting sharp gains in the Monday session. Currently, the DAX is at 11,532, up 2.46%. Earlier in the day, the index touched 11,568, its highest level since November 14. On the release front, German and eurozone manufacturing PMIs both missed their estimates, with both indicators posting readings of 51.8 points.
The G-20 summit was a big success as far as the markets were concerned. Investors paid scant attention to the discussions between world leaders, focusing instead on a weekend dinner meeting between President Trump and Chinese President Xi Jinping. Just last week, Trump had threatened to raise tariffs on $200 billion in Chinese products from 10 percent to 25 percent on January 1. However, the tone was optimistic after the meeting, with China receiving a short reprieve. The sides have agreed to continue talks for another 90 days, and the U.S. tariffs will take effect if no agreement is reached. The markets were clearly relieved that the tariff war has de-escalated, and European markets have jumped on Monday, following the lead of Asian markets. At the same time, the U.S. and China remain far apart on resolving the trade war, and the greenback will likely reverse directions unless the parties make substantial progress in the trade dispute, which has shaken the markets and threatens to derail global growth.
German indicators have been pointing lower, and this worrying trend continued on Monday. Manufacturing PMI dropped to 51.8 in November, down from 52.2 points in October. This marked a fourth straight downturn and was the lowest reading since April 2016. The global trade war has taken a bite out of German exports and a slowdown in the eurozone economy has dampened manufacturing growth in Germany. On Friday, German retail sales fell by 0.3%, its first decline since July. Consumers are holding tighter to the purse strings, which is hurting economic growth. Unsurprisingly, consumer confidence softened in November – the reading of 10.4 points was its lowest level since May 2017.
Monday (December 3)
- 3:55 German Final Manufacturing PMI. Estimate 51.6. Actual 51.8
- 4:00 Eurozone Final Manufacturing PMI. Estimate 51.5. Actual 51.8
Tuesday (December 4)
- 5:00 Eurozone PPI. Estimate 0.5%
*All release times are DST
*Key events are in bold
DAX, Monday, December 3 at 6:45 EST
Previous Close: 11,257 Open: 11,539 Low: 11,522 High: 11,568 Close: 11,532
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