DAX hits 7-month high as eurozone inflation climbs higher

The DAX index has posted gains in the Friday session. Currently, the DAX is at 12,384, up 0.32% on the day. The DAX punched above the 12,400 level earlier on Friday, for the first time since late September. In economic news, eurozone CPI Flash Estimate improved to 1.7% in April, up from 1.4% a month earlier. The core release climbed to 1.2%, compared to 0.8% in March. Both indicators beat their estimates.

Eurozone inflation is expected to climb to 1.7% in April, marking a 5-month high. The stronger reading is a reflection of higher oil prices, which has pushed prices higher. Inflation is moving closer to the ECB target of close to 2 percent, and if the upward trend continues, ECB rate-setters will have to give some thought to raising interest rate levels. The bank recently announced that no rate hikes were planned before the spring of 2020, and this dovish stance makes the euro less attractive to investors.

It was all April flowers for the blue-chip DAX, which soared 7.1% last month. This marked the best monthly gain for the index since December 2016. The gain is all the more impressive, considering that the eurozone is gripped in slowdown and the German locomotive is also showing some soft numbers. The DAX is up a whopping 16% since the start of the year, and has benefited from a sluggish euro which has not attracted investors. The currency has declined 2.5% since January 1.

Manufacturing remains a sore spot in Germany and the rest of the eurozone, as underscored by the April manufacturing PMIs. The indicators continue to point to contraction in the manufacturing sector, although there was some slight improvement in April, compared to the March scores. Weaker global demand and taken a heavy toll on exports from Germany and the eurozone, which has damaged the manufacturing sectors. German retail sales declined in March, as nervous consumers held tight to their purse strings.

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Economic Calendar

Friday (May 3)

• 5:00 Eurozone CPI Flash Estimate. Estimate 1.6%. Actual 1.7%
  
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%. Actual 1.2%
  
• 5:00 Eurozone PPI. Estimate 0.0%. Actual -0.1%

*All release times are DST

*Key events are in bold

DAX, Friday, May 3 at 6:50 DST

Previous Close: 12,345 Open: 12,342 Low: 12,341 High: 12,404 Close: 12,384

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