The DAX started the week with a sharp decline, but has reversed directions and recovered much of these losses. Currently, the index is at 12,171, up 0.23% on the day. Today’s highlight is the minutes of the Federal Reserve’s most recent meeting. Thursday will be busy, as Germany releases GDP and Ifo Business Climate. The eurozone and Germany release service and manufacturing PMIs, while the ECB posts the minutes of the April policy meeting.
U.S-China trade tensions continue to trigger volatility in the equity markets. On Friday, the Trump administration announced it was imposing trade sanctions on the Chinese telecom giant Huawei, a move which sent stock markets reeling on Monday. However, the U.S. Commerce Department has taken a step back, saying that it will provide 3-month exemptions to U.S. companies that sell to Huawei. The tussle over Huawei has exacerbated the trade war between the two economic giants, and risk appetite will remain soft until the sides resume negotiations.
Investors will be keeping a close eye on the minutes of the Fed meeting earlier this month. At the meeting, the Federal Reserve maintained the benchmark rate for a fourth straight month. The rate statement noted that inflation pressures remain muted and that the FOMC would remain patient regarding future rate movements. Jerome Powell reinforced this stance after the meeting, saying that “we don’t see a strong case for moving in either direction”. Will the minutes point to any bias regarding the next rate move? The Fed is already on record as saying it does not expect to raise rates before 2020, and with inflation levels persistently below the Fed’s target of 2.0%, the Fed can afford to continue its wait-and-see stance.
False dawns 
Wednesday (May 22)
- 3:38 ECB President Draghi Speaks
- 5:34 German 10-year Bond Auction. Actual -0.07/1.8
- 14:00 US FOMC Meeting Minutes
Thursday (May 23)
- 2:00 German Final GDP. Estimate 0.4%
- 3:30 German Flash Manufacturing PMI. Estimate 44.9
- 3:30 German Flash Services PMI. Estimate 55.2
- 4:00 Eurozone Flash Manufacturing PMI. Estimate 48.2
- 4:00 Eurozone Flash Services PMI. Estimate 53.0
- 4:00 German Ifo Business Climate. Estimate 99.2
- 4:00 ECB Financial Stability Review
- Day 1 – European Parliamentary Elections
- 7:30 ECB Monetary Policy Meeting Accounts
*All release times are DST
*Key events are in bold
DAX, Wednesday, May 22 at 7:55 DST
Previous Close: 12,146 Open: 12,134 Low: 12,117 High: 12,212 Close: 12,171
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