DAX slips as ECB expected to slash forecasts, hint at stimulus

The DAX index has lost ground in the Thursday session, ahead of the ECB decision later in the day. Currently, the DAX is at 11,535, down 0.43% on the day. As well, the eurozone GDP is expected to post a gain of 0.2% for a second straight quarter. On Friday, Germany releases factory orders.

The ECB is expected to stay on the sidelines and maintain interest rates at 0.00%, where they have been pegged since March 2016. Still, the markets are expecting some dovish moves by the ECB at the policy meeting. The ECB is forecast to revise downwards its growth forecasts, and could announce fresh liquidity, so as to provide corporate borrowers with cheap credit. The eurozone economy showed some strength in the first half of 2018, which led to talk of a rate hike in the second half of 2019. However, with Germany and the eurozone in the midst of a slowdown triggered by global trade tensions, it’s unlikely that the ECB will make a rate move before 2020.

The U.S-China trade war has weighed on the global economy and caused significant volatility in the equity markets. Now that trade tensions have eased between the two super-economies, investor risk appetite has improved. If progress continues and the sides ink an agreement, traders can expect the markets to climb sharply. An agreement between the U.S. and China cannot come fast enough for Germany, the locomotive of the eurozone. The OECD has lowered its 2019 GDP forecast for Germany to 0.7%, down from 1.6% in November.

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Economic Calendar

Thursday (March 7)

  • 5:00 Eurozone Final Employment Change. Estimate 0.3%. Actual 0.3%
  • 5:00 Eurozone Revised GDP. Estimate 0.2%. Actual 0.2%
  • 7:45 ECB Main Refinancing Rate. Estimate 0.00%
  • 7:45 ECB Monetary Policy Statement
  • 8:30 ECB Press Conference

Friday (March 8)

  • 2:00 German Factory Orders. Estimate 0.5%

*All release times are DST

*Key events are in bold

DAX, Thursday, March 7 at 7:30 EST

Previous Close: 11,587 Open: 11,540 Low: 11,515 High: 11,558 Close: 11,535

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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.