DAX dips as Fed Reserve remains hawkish

The DAX index has dropped lower in the Friday session, after sharp losses on Thursday. Currently, the DAX is trading at 11,470, down 0.50% since the Thursday close. In economic news, there are no German or eurozone indicators, so movement in the Friday session will be mostly driven by U.S inflation and consumer confidence numbers later in the day.

The intense mid-term elections in the U.S. earlier this week boosted global stock markets and gave the DAX a slight boost, but the upward momentum quickly dissipated after the Federal Reserve rate statement on Thursday. Investors were not expecting anything significant from the Fed meeting and policymakers did not disappoint. The Fed had trouble locating trouble spots in the U.S economy, which continues to fire on all cylinders. The rate statement noted that job creation remains strong, unemployment is down and consumer spending has been growing. The one caveat to this rosy picture was that business investment has slowed. The statement added that further “gradual increases” are expected, given that headline and core inflation are close to the Fed target of 2 percent. The Fed next convenes in mid-December, with the CME Group pegging the odds of December rate hike at a strong 76 percent.

Are Rome and Brussels headed for a nasty collision? The crisis over the Italian budget shows no signs of easing anytime soon, and the fallout could weigh on the financial markets and on the euro, which has broken below the 1.14 level. The EU’s Economic Commissioner, Pierre Moscovici, has demanded that Rome revise its budget, which it says increases Italy’s debt and is in breach of EU rules. Moscovici has demanded a response from Rome by November 13 and has even threatened sanctions if the Italian government does not comply. On Wednesday, Italian Prime Minister Giuseppe Conte said that he had no intention of backing down over the budget. Italy is the third largest economy in the eurozone, and the financial markets and the euro could react negatively if Rome and Brussels cannot resolve the crisis.

European Open – Stocks lower on hawkish Fed

EUSD/JPY retreats from five-week high

The Fed affect

Economic Calendar

Friday (November 9)

  • There are no German or eurozone events

DAX, Friday, November 9 at 6:25 EST

Previous Close: 11,527 Open: 11,468 Low: 11,417 High: 11,496 Close: 11,470

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.