DAX sluggish, but Deutsche Bank sparkles on merger talks

The DAX has started the week with losses. In the Monday session, the DAX is at 11,660, down 0.21% on the day. In economic news, there is only one event on the schedule. The eurozone trade surplus climbed to EUR 17.0 billion, close to the forecast of EUR 17.2 billion. This marked a 9-month high. On Tuesday, Germany releases ZEW Economic Sentiment, which is expected to remain mired in negative territory.

There was a dramatic development in the European banking sector, as Deutsche Bank confirmed that it is conducting merger talks with another German bank, Commerzbank. The new entity will be the third largest bank in the eurozone, according to assets. Interestingly, the head of Deutsche Bank wrote a note to staff on Sunday, cautioning that a merger was not a done deal. Still, investors have given a thumbs-up to the announcement, with Deutsche Bank shares soaring 5.0% on Monday.

The Brexit drama is at fever pitch, after parliament voted on Brexit three times last week. As expected, lawmakers voted to ask the European Union for an extension on Article 50. Britain is scheduled to depart the E.U. on March 29, so an extension would give the May government some breathing room. However, the uncertainty surrounding Brexit is far from over. It’s unclear how long an extension the E.U. would be willing to grant, although senior E.U officials have said that a year or more would be acceptable. The E.U. will have to reach a consensus from all 27 members, each of whom must vote in favor of an extension to Article 50. Parliament remains deeply divided over Brexit, and Prime Minister May, though badly shaken, hasn’t given up on her withdrawal deal. With another parliamentary vote expected next week, traders should be prepared for more volatility from European stock markets.

Yen slides on weak trade data

Sterling, yields and stocks set for a volatile week

Economic Calendar

Monday (March 18)

• 6:00 Eurozone Trade Balance. Estimate 17.2B. Actual 17.0B
  
• 7:00 German Buba Monthly Report

Tuesday (March 19)

• 6:00 German ZEW Economic Sentiment. Estimate -11.0
• 6:00 Eurozone ZEW Economic Sentiment. Estimate -15.1

*All release times are DST

*Key events are in bold

DAX, Monday, March 18 at 6:50 EST

Previous Close: 11,685 Open: 11,694 Low: 11,660 High: 11,712 Close: 11,660

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