DAX drops to 2-month low as investors flee to safety over trade jitters

The DAX has posted gains on Thursday, after sharp losses on Wednesday. The index has declined 1.1% this week. Currently, the index is at 11,872, up 0.29% on the day. On the release front, there are no German or eurozone events. In the U.S., today’s highlight is second estimate GDP, with an estimate of 3.1%. On Friday, Germany releases retail sales and consumer inflation.

The weak global economy has dampened growth in Germany, although the largest economy in the eurozone is performing better than the rest of the bloc. Germany’s labor market has remained a bright spot, but there was negative news in April, as unemployment rolls ballooned by 60 thousand in May, surprising the markets. The indicator has recorded consecutive declines for almost two years, and the estimate stood at -8 thousand. The unemployment rate edged up to 5.0% in May, up from 4.9% in April. The Federal Labor Agency said that the weak numbers indicate “a weakening economy on unemployment”. Trade tensions have hurt the German manufacturing and export sectors, but a tight labor market has boosted consumer spending, a key driver of economic growth. If the employment market shows signs of weakness, the German economy could falter and drag the euro to lower levels.

Equities lose their bonding

Economic terrorism has equities and bond yields under pressure

Economic Calendar

Thursday (May 30)

  • 8:30 US Preliminary GDP. Estimate 3.1%

Friday (May 31)

  • 2:00 German Retail Sales. Estimate 0.4%
  • 2:00 German Preliminary CPI. Estimate 0.3%

*All release times are DST

*Key events are in bold

DAX, Thursday, May 30 at 7:35 DST

Previous Close: 11,837 Open: 11,892 Low: 11,873 High: 11,918 Close: 11,872

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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.