DAX stops slide on hopes of US-China talk

The DAX index has posted gains on Tuesday, after very sharp losses in the Monday session. Currently, the DAX is trading at 11,408, up 0.32% on the day. In economic news, German ZEW Economic Sentiment posted a dismal reading of -24.1, just above the estimate of -24.2 points. Eurozone ZEW Economic Sentiment fell to -22.0, much weaker than the estimate of -17.3 points. On Wednesday, Germany and the eurozone will release GDP reports.

It was black Monday for European stock markets, as technology stocks were down sharply. The DAX slid some 2.30% on Tuesday, dropping to its lowest level since the end of October. After the steep losses on Monday, there is some optimism on Tuesday, after reports that a senior Chinese official will visit Washington shortly to hold trade talks.

The deadlock between Italy and the EU over Italy’s budget continues to weigh on the markets. The EU Commission has set midnight Tuesday as a deadline for Italy to revise its budget by Tuesday, which it argues raises Italy’s debt and is in breach of EU fiscal rules. However, Italian officials have flatly rejected the EU demands. Matteo Salvini, Italy’s interior minister, stated that the government would not change the budget by “one iota”. The EU could respond with stiff fines, worth billions of euros. There is serious concern in Brussels about that overspending by the Italian government could hurt Italian stocks and bonds, destabilize the banking sector and even lead to contagion in other eurozone members. With Rome and Brussels on a collision course, the fallout could weigh on European stock markets and the euro.

Another issue weighing on European stock markets is increasing concern over the Brexit negotiations, with the clock ticking to Brexit Day in March. Prime Minister May is facing stiff opposition over her Brexit proposals, both domestically and from Brussels. British and European negotiators met on the weekend but were unable to resolve the Irish border issue. The EU wants a backstop solution to be under the jurisdiction of the European Court of Justice, but the UK is unlikely to agree to such a proposal.

Commodities Weekly: Oil stays soft despite OPEC supply plans

Markets pare losses after rough start to the week

Economic Calendar

Tuesday (November 13)

• 2:00 German Final CPI. Estimate 0.2%. Actual 0.2%
• 5:00 German ZEW Economic Sentiment. Estimate -24.2. Actual -24.1
• 5:00 Eurozone ZEW Economic Sentiment. Estimate -17.3. Actual -22.0

Wednesday (November 14)

• 2:00 German Preliminary GDP. Estimate -0.3%
• 5:00 Eurozone Flash GDP. Estimate 0.2%
• 5:00 Eurozone Industrial Production. Estimate -0.4%
• Tentative – German 30-year Bond Auction

DAX, Tuesday, November 13 at 8:10 EST

Open: 11,374 Low: 11,446 High: 11,368 Close: 11,408

Content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.