DAX Recovers as German Consumer Spending Jumps

The DAX has moved higher in Wednesday session, after two consecutive losing sessions. Currently, the DAX is at 12,762, up 0.75% on the day. In economic news, German retail sales jumped 2.3%, easily beating the estimate of 0.5%. Later in the day, Germany releases Preliminary CPI, which is expected to rise to 0.3%. In the US, the key event is Preliminary GDP, with an estimate of 2.3%.

European stock markets are seeing red and the DAX is down 2.2% this week, despite rebounding on Wednesday. The decline is in response to the continuing political drama in Italy, the Eurozone’s fourth-largest economy. The drama started when President Sergio Mattarella stunned the nation, rejecting the choice for finance minister of the two parties which were expected to form a coalition, the League Nord and the Five Star Movement. Mattarella said he could not support the nomination of a finance minister who was in favor of Italy leaving the eurozone. The prime minister-elect, Giuseppe Conte, then announced that he had withdrawn his mandate to form a government, and Mattarella invited Carlo Cottarelli, a former IMF economist, to form a temporary technocrat government. However, there are reports that the League and Five Start Movement could get another kick at the can to form a government. Another possibility is that Italy will hold a snap election. It’s doubtful if another election would change the political landscape, so Matterella will likely huddle with political leaders and seek a compromise in order to avoid another general election.

German retail sales were unexpectedly strong in April, with a sharp gain of 2.3%. This reading ended a nasty streak of four declines. The gain is the strongest since December, and raises hopes that second quarter growth will rebound after a sluggish first quarter. Inflation is also expected to improve, with German Preliminary CPI forecast to rise to 0.3% in May after a flat reading of 0.0% in April. The story in France, the second largest economy in the eurozone, was not as bright. Consumer spending plunged 1.5% in April, marking a 3-month low. Preliminary GDP fell to 0.2% in March, down from 0.6% a month earlier.

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Economic Fundamentals

Wednesday (May 30)

  • 2:00 German Retail Sales. Estimate 0.5%. Actual 2.3%
  • 2:00 German Import Prices. Estimate 0.7%. Actual 0.6%
  • All Day – German Preliminary CPI. Estimate 0.3%
  • 3:55 German Unemployment Change. Estimate -10K. Actual -11K
  • 8:30 US Preliminary GDP. Estimate 2.3%

Thursday (May 31)

  • 5:00 Eurozone CPI Flash Estimate. Estimate 1.6%
  • 5:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%
  • 5:00 Eurozone Unemployment Rate. Estimate 8.4%

*All release times are DST

*Key events are in bold

DAX, Wednesday, May 30 at 7:10 DST

Open: 12,693 Low: 12,741 High: 12.663 Close: 12,762

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

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.
Kenny Fisher

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