DAX Starts Week Quietly, Industrial Report Sparkles

The DAX is showing little movement in the Monday session. Currently, the index is at 12,965.50, up 0.07% since Friday’s close. On the release front, German Industrial Production jumped 3.6%, crushing the estimate of 0.7%. Eurozone Sentix Investor Confidence improved to 29.7, above the estimate of 28.6 points. On Tuesday, Germany releases Trade Balance, with the trade surplus expected to climb to EUR 20.1 billion.

Germany’s industrial data for August continues to impress. Industrial Production surged 2.7%, the second-highest gain in 2017. Last week, Factory Orders gained 3.6%, its best performance since December 2016. Strong global demand for German goods, in particular automobiles, has been a boon for German industrial and manufacturing orders. September PMIs were also solid, as the services and manufacturing sectors continue to show expansion. These figures could point to stronger third quarter for the German economy, which has led the way for a strong rebound for the eurozone economy.

All eyes are on Spain, as the Catalan Crisis over the independence could go down to the wire. Catalan’s parliament meets on Tuesday, and Catalan leader Carles Puigdemont has said that it is up to the Catalan parliament to approve independence, but it’s unclear what path lawmakers will take. Puigdemont has not had any talks with Spanish Prime Minister Mariano Rajoy, as the constitutional crisis continues this week. On Sunday, a demonstration against the referendum attracted some 350,000 people, in a show of support for Catalonia remaining in Spain. Which side will blink first? Madrid could literally shut down the Catalan parliament under Spain’s constitution, but has hesitated to take such drastic action. However, if the Catalan parliament declares independence, Rajoy could respond forcefully. The euro was down only marginally last week, but the crisis could hurt the Spanish economy. Last week, two major banks, Caixabank and Sabadell, said they would relocate their corporate headquarters out of Catalonia, and other large companies could follow suit.

Economic Calendar

Monday (October 9)

• 2:00 German Industrial Production. Estimate 0.9%. Actual 2.6%
• 4:30 Eurozone Sentix Investor Confidence. Estimate 28.6. Actual 29.7
• All Day – Eurogroup Meetings

Tuesday (October 10)

• 2:00 German Trade Balance. Estimate 20.1B
• All Day – ECOFIN Meetings

*All release times are EDT

*Key events are in bold

DAX, Monday, October 9 at 7:55 EDT

Open: 12,979.00 High: 12,997.50 Low: 12,44.00 Close: 12,965.50

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