DAX plunges as Trump threatens Mexico with tariffs

The DAX has declined sharply in the Friday session. Currently, the index is at 11,685, down 1.82% on the day. In economic news, German consumer data is in focus. Retail sales declined by 2.0% in April, much worse than the estimate of a 0.4% gain. Later in the day, Germany releases CPI, with an estimate of 0.3%.

Equity markets are in red territory on Friday, in response to President Trump’s threat to slap tariffs on all Mexican products, due to the illegal immigration problem. Although Trump said that tariffs would be set at just 5%, risk appetite has fallen sharply. On the DAX, which is especially vulnerable to trade risks, bank and automaker listings are deep in negative territory. Deutsche Bank has declined 2.16%, while Daimler has fallen 3.33%, BMW is down 2.50% and Volkswagen has plunged 4.2%.

Is the German locomotive slowing down? The normally strong labor market shocked investors as unemployment rolls soared by 60,000. This was the first gain in almost two years. There was more negative news on Friday, as retail sales fell 2.0%, its sharpest drop since January. German inflation is next, with Preliminary CPI projected to slow to 0.3% in May, after a strong gain of 1.0% in April.

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Economic Calendar

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, Friday, May 31 at 6:55 DST

Previous Close: 11,902 Open: 11,760 Low: 11,661 High: 11,774 Close: 11,685

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.
Kenny Fisher

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