Volatility on DAX continues as Trump tariff comments rattle investors

It has been a volatile week in the stock markets and the DAX index has been marked by wild swings. The index has slipped 2.6% since the end of last week. In economic news, there are no German or eurozone events, but that hasn’t stopped the sharp swings. Currently, the DAX is at 12,078, down 0.84% on the day. On Friday, Germany releases trade balance, with the surplus expected to rise to EUR 19.4 billion.

The ebb-and-flow in trade tensions between the U.S. and China continues this week, which has triggered sharp moves on global stock markets. On Tuesday, the DAX fell 1.6%, its worst daily performance since mid-March. The index reversed directions and gained close to 1.0% percent on Wednesday, but has surrendered these gains on Thursday. U.S. President Trump has threatened to slap new tariffs on China on Friday, but investors are hoping that the unpredictable Trump will cancel the tariffs, which will undoubtedly trigger counter-tariffs from China. Late Wednesday, Trump said that China “broke the deal” and this has caused sharp losses on global stock markets on Thursday. With talks between the sides resuming in Washington on Thursday, there could be further developments before the new tariffs take effect at midnight Friday.

The DAX slumped on Tuesday after the EU published a report which slashed the 2019 growth outlook for Germany. In February, the EU projected growth of 1.1%, but this has been drastically cut to 0.5%. The downgrade for the eurozone was minor, from 1.5% to 1.4%. The EU noted that the downside risks to the eurozone remain “prominent”, and noted that deadlines for the U.S-China trade talks and Brexit had come and passed, leaving significant uncertainty about the economic outlook. The report warned that “an escalation of trade tensions could prove to be a major shock.” The weak German forecast and pessimistic tone of the report unnerved investors and sent the DAX sharply lower.

Neutrality is not stability

Tariff Endgame

Economic Calendar

Thursday (May 9)

  • There are no eurozone or German events

Friday (May 10)

  • 2:00 German Trade Balance. Estimate 19.4B

*All release times are DST

*Key events are in bold

DAX, Thursday, May 9 at 8:00 DST

Previous Close: 12,179 Open: 12,096 Low: 12,050 High: 12,121 Close: 12,078

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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.