DAX Edges Lower Despite Sharp German Trade Surplus

The DAX has lost ground in the Thursday session. Currently, the DAX is at 13,346.50, down 0.27% on the day. On the release front, Germany’s trade surplus improved to EUR 21.8 billion, easily beating the forecast of EUR 21.6 billion. The EU will release its economic forecast, which provides analysis and economic activity of the 28 EU members.

Stock markets are sensitive to corporate earnings, and disappointing numbers on Tuesday pushed the DAX down 1.0 percent. Financial stocks were in red territory – Deutsche Bank dropped 0.59% and Commerzbank slid 1.53 percent. The DAX remains under pressure on Thursday.

The eurozone economy continues to impress in 2017, and retail sales, the primary gauge of consumer spending, rebounded sharply in September. The reading of 0.7% came after two straight declines, and marked the strongest gain since February. Consumer confidence is high, and the markets are hoping for stronger consumer spending in the fourth quarter.

German coalition talks are gaining steam, as President Angela Merkel has convinced potential partners to drop key demands. Merkel’s conservative bloc saw its support erode in the election, and needs the support of two smaller parties – the Greens and the liberal FDU. After intense negotiations, the Greens have dropped a demand on the phase-out of fossil fuels. The FDU wanted to lower taxes by 30-40 billion euros, but has agreed to more moderate tax cuts. Merkel has been under pressure from her own bloc to tighten immigration policy, but the Greens are opposed to such a move. If the talks continue to progress, Merkel could have a government in place in December.

Economic Calendar

Thursday (November 9)

• 2:00 German Trade Balance. Estimate 21.0B. Actual 28.0B
• 4:00 ECB Economic Bulletin
• 5:00 EU Economic Forecasts

*All release times are GMT

*Key events are in bold

DAX, Thursday, November 9 at 6:20 EDT

Open: 13,377.50 High: 13,401.75 Low: 13,334.50 Close: 13,346.50

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