DAX dips as investor optimism over trade talks cools

The DAX has edged lower in the Tuesday session. Currently, the DAX is at 11,469, down 0.31% on the day. In economic news, the sole event was German GfK Consumer Confidence. The indicator remained steady, with a second straight gain of 10.8 points.

The optimism over the trade war between the U.S. and China has boosted global stock markets, as risk appetite has risen on the hope that the sides will reach an agreement. The parties concluded a fourth round of talks last week and President Trump has said that the U.S. will not impose new tariffs on China on March 1, crediting “substantial progress” in the negotiations. There is even talk of a meeting between Trump and Chinese President Xi at the end of March, if an agreement is reached. Some analysts have declared that an agreement could fuel a stock market rally as much as 10 percent. Still, with almost no news about the substance of the talks, there are plenty of question marks. It remains unclear if China will agree to substantial structural changes in trade, as demanded by the United States. Will the current set of tariffs be completely removed if a deal is reached? If not, market enthusiasm could evaporate, as the tariffs have caused enormous turmoil in international trade and dampened global growth.

Investors may be excited about an end to the U.S-China trade spat, but there has been little to cheer about on the domestic front. German data disappointed last week, raising concerns that after a slowdown in the fourth quarter, Q1 will also be a soft quarter. On Friday, Germany’s fourth-quarter GDP showed no change, after a contraction of 0.2% in the third quarter. The Ifo Business Climate survey slowed for a sixth successive month, indicating concern in the business sector about the country’s economic outlook. Manufacturing and inflation data also disappointed. The manufacturing PMI contracted for a second straight month, while German CPI declined in January for the first time in a year. If the weak numbers continue, investor risk appetite could fall and weigh on the DAX.

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Economic Calendar

Tuesday (February 26)

  • 2:00 German GfK Consumer Climate. Estimate 10.8

*All release times are DST

*Key events are in bold

DAX, Tuesday, February 26 at 6:45 EST

Previous Close: 11,505 Open: 11,454 Low: 11,441 High: 11,506 Close: 11,469

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.