Sharp German Numbers Send DAX to 2-Year High

The DAX Index has edged higher in the Friday session, as the DAX trades at 12,249.50. On the release front, German data were strong. Retail Sales jumped 1.8%, well above the estimate of 0.7%. As well, unemployment claims dropped by 30 thousand, compared to the estimate of 10 thousand. Eurozone inflation data was not as strong, as CPI Flash Estimate dropped to 1.5%, short of the forecast of 1.8%. In the US, today’s highlight is UoM Consumer Sentiment, which is expected to improve to 97.8 points.

It’s been an excellent week for the DAX, which has gained 2.4 percent. Earlier on Friday, the DAX pushed above 12,260, its highest level since April 2015. The index has been boosted by strong German numbers across the German economy, as business confidence, retail sales and unemployment claims have all beat their estimates. The German economy, the largest in Europe, is looking sharp and has enjoyed a robust first quarter in 2017. Stronger global trade has led to increased demand for German exports, notably cars and machinery. Germany’s GDP expanded 1.6% in 2016, its highest rate since 2012. The generally positive picture in Germany has boosted the eurozone economy and if the strong numbers continue, the ECB will be under more pressure to tighten monetary policy.

Since Donald Trump assumed office in January, his administration has been beset by controversy and crises. Trump has yet to provide any details of an economic policy, much to the consternation of the markets. Last week, Trump’s proposed healthcare bill was dead on arrival before even being voted on, a humiliating defeat for the president. This setback has made the markets even more jittery about Trump, and the inquiry into the Trump administration’s links with Russia is gathering steam, which is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but the White House will need to improve coordination with Republican lawmakers to ensure that his next attempt to pass legislation is not a repeat of the healthcare debacle.

Economic Calendar

Friday (March 31)

• 2:00 German Retail Sales. Estimate 0.7%. Actual 1.8%
• 2:45 French Consumer Spending. Estimate 0.3%. Actual -0.8%
• 2:45 French Preliminary CPI. Estimate 0.7%. Actual 0.6%
• 2:55 German Unemployment Claims. Estimate -10K. Actual -30K
• 5:00 Eurozone CPI Flash Estimate. Estimate 1.8%. Actual 1.5%
• 5:00 Eurozone Core CPI Flash Estimate. Estimate 0.8%. Actual 0.7%
• 5:00 Italian Preliminary CPI. Estimate 0.1%. Actual 0.0%

*All release times are EST

*Key events are in bold

DAX, Friday, March 31 at 6:45 EST

Open: 12,234.00 High: 12,260.50 Low: 12,230.25 Close: 12,249.50

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