DAX slips on fears of more US tariffs on China

The DAX index has started the week in red territory. In the Monday session, the index is at 12,069, down 0.45% on the day. On the release front, Eurozone Final CPI ticked lower to 2.0%, matching the estimate. Final Core CPI also matched the estimate, at 0.1%.

Is the US-China trade war about to get uglier? The world’s two largest economies have already exchanged tariffs, and President Trump has threatened to sharply up the ante and impose tariffs of some $200 billion on China. Trump may be bluffing, but his rhetoric could torpedo trade talks with China. The timing of any new tariffs remains uncertain, as well as the level of the tariffs – will they be 10% or a far more punitive 25%? Investors remain on alert, and the specter of another tariff announcement from the U.S and the likely retaliatory response from China could boost the dollar this week against the euro. If the U.S does go ahead with further tariffs, it could put a chill on more than the equity markets. According to a report from UBS, a tariff of 10% on Chinese products could slow U.S growth in the fourth quarter and result in the Federal Reserve skipping a December rate hike.

The U.S ended the week with mixed numbers. Retail sales in August dropped to 0.1%, down from 0.5% a month earlier. This missed the estimate of 0.4%. Core retail sales followed a similar trend, falling from 0.6% to o.3%. It missed the forecast of 0.5%. These key consumer spending numbers come on the heels of CPI, which came in at just 0.2% and missed the estimate of 0.3%. There was better news from UoM Consumer Sentiment in September, which jumped to 100.8, above the estimate of 96.7 points, This marked the first time that the indicator cracked the 100-level since March.

Economic Calendar

Monday (September 17)

• 5:00 Eurozone Final CPI. Estimate 2.0%. Actual 2.0%
• 5:00 Eurozone Final Core CPI. Estimate 1.0%. Actual 1.0%
• 6:00 German Buba Monthly Report

*All release times are DST

*Key events are in bold

DAX, Monday, September 17 at 6:35 DST

Previous Close: 12,124 Open: 12,080 Low: 12,040 High: 12,123 Close: 12,069

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