The DAX index continues to gain ground this week. In the Thursday session, the DAX is at 11,192, up 0.23% on the day. On the release front, German Preliminary GDP improved to 0.0%, shy of the estimate of 0.1%. Eurozone Flash GDP posted a second successive gain of 0.2%. On the employment front, eurozone flash employment change edged higher to 0.3%, above the forecast of 0.2%. On Friday, the eurozone releases trade balance.
German and eurozone GDP were unimpressive in the fourth quarter. German Preliminary GDP was flat at 0.0%, after a decline of 0.2% in the third quarter. The eurozone’s largest economy managed to avoid a technical recession, which is two consecutive declines in quarterly growth. Germany’s manufacturing industry is limping, with factory orders and industry production posting declines in December. Eurozone Flash GDP remained stuck at 0.2%, shy of the forecast of 0.3%. On an annualized basis, fourth quarter growth was 0.9% in Germany and 1.2% in eurozone, both weaker than the third quarter numbers. If eurozone and German data remains soft in the first quarter, the DAX could lose ground.
Investors are feeling more optimistic over the U.S-China trade war. On Thursday, China announced that exports had jumped 9.1% in January on an annualized basis, compared to the forecast of -3.2%. This was a strong rebound from December, when exports fell 4.4%. Talks between the U.S. and China are continuing, and the big question is will President Trump suspend the March 1 deadline to impose new tariffs on China. The U.S. has threatened to raise tariffs on some $200 billion of Chinese goods from 10% to 25%, but Trump has said he could let the deadline pass if there is progress in the talks. Risk appetite has improved this week, boosting the DAX by 2.4% this week.
Thursday (February 14)
- 2:00 German Preliminary GDP. Estimate 0.1%. Actual 0.0%
- 2:00 German WPI. Estimate 0.3%. Actual -0.7%
- 5:00 Eurozone Flash GDP. Estimate 0.2%. Actual 0.2%
- 5:00 Eurozone Flash Employment Change. Estimate 0.2%. Actual 0.3%
Friday (February 15)
- 5:00 Eurozone Trade Balance. Estimate 15.6B
*All release times are DST
*Key events are in bold
DAX, Thursday, February 14 at 7:35 EST
Previous Close: 11,167 Open: 11,1262 Low: 11,169 High: 11,268 Close: 11,193
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