DAX under pressure as bank, auto shares slide

The DAX index has edged lower in the Monday session. Currently, the index is at 11,151, down 0.27% on the day. It’s a slow start to the week, with no major events. Eurozone Sentix Investor Confidence posted a third successive decline, with a score of -3.7 points. On the inflation front, PPI disappointed with a decline of 0.8%, its weakest reading since January 2016. On Tuesday, Germany and the eurozone release services PMIs. The eurozone will also publish retail sales.

German numbers continue to sag, raising concerns about the health of the eurozone economy. On Friday, German manufacturing PMI for January dipped to 49.7, below the 50-point level which separates contraction and expansion. This was the weakest score since October 2014. Trade tensions and weakness in the German auto sector continue to weigh on the manufacturing sector. This reading followed a very soft reading from German retail sales, which plunged 4.3% in December. This marked its sharpest decline in more than 12 years.

Weak German numbers are weighing on the DAX in the Monday session as bank and automaker shares are down sharply. BMW, Daimler and Volkswagen have all declined by over 1.0%, and Deutsche Bank has fallen by 1.4%. Lufthansa has dropped by 0.81%, after low-cost carrier Ryanair posted losses in the fourth quarter.

In the U.S., key employment numbers were a mix on Friday. The economy created 304 thousand jobs, crushing the estimate of 165 thousand. This was the second score above the 300-thousand mark for a second successive month. However, wage growth was a disappointment, dropping from 0.4% to 0.1%. This fell shy of the estimate of 0.3% and marked the weakest reading since April 2018. Earlier in the week, the Fed continued its dovish message in its first monetary policy update of 2019. Fed chair Powell reinforced the sentiment that the Fed will ease up on rate policy, saying the central bank would be “patient” regarding future rate hikes.

Europe flat as Asia goes into holiday mode

Aussie dips on weak housing data

Softer Dollar to Boost Markets Ahead of Lunar New Year

Economic Calendar

Monday (February 4)

  • 4:30 Eurozone Sentix Investor Confidence. Estimate -1.1. Actual -3.7
  • 5:00 Eurozone PPI. Estimate -0.7%. Actual -0.8%

Tuesday (February 5 )

  • 3:55 German Final Services PMI. Estimate 53.1
  • 4:00 Eurozone Final Services PMI. Estimate 50.8
  • 5:00 Euruzone Retail Sales. Estimate -1.5%

*All release times are DST

*Key events are in bold

DAX, Monday, February 4 at 7:00 EST

Previous Close: 11,180 Open: 11,185 Low: 11,129 High: 11,210 Close: 11,151

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Kenny Fisher

Kenny Fisher

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