DAX Ignores Political Crisis, German Rally Continues

The DAX index has started the week with strong gains. In the Tuesday session, the DAX is at 13,120.50, down 0.36% on the day. In economic news, Eurozone Consumer Confidence is expected to remain at -1 point. In the US, the Federal Reserve releases the minutes of its November policy meeting. On Thursday, Germany and the Eurozone release manufacturing PMI reports, and Germany will publish final GDP. The ECB will release the summary from its October policy meeting.

The political deadlock continues in Germany, as President Angela Merkel faces her toughest challenge since coming to power 12 years ago. With the Free Democratic Party pulling out of coalition talks on the weekend, Merkel appears unable to form a coalition government. Merkel has said she would rather hold another election than try to govern with a shaky minority government. President Frank-Walter Steinmeier has urged the parties to redouble their efforts in order to reach an agreement, warning that another election would cause uncertainty in German as well as Europe. The crisis in the eurozone’s largest economy could paralyze the European Union, as Merkel has become the unofficial leader of the bloc. Euro-supporters such as French President Emmanuel Macron have ambitious plans to strengthen European integration, but this will have to wait until Merkel can straighten out her domestic challenges.

The German economy has been performing well in 2017, but there is some concern about possible fallout from coalition talks which have fallen apart. So far, the euro and European stock markets have held their own and are largely unmoved by the abrupt termination of the talks, which could lead to snap elections. However, another election would not necessarily improve Merkel’s ability to form a coalition, especially if the far-right gains more ground over immigration fears.

Economic Calendar

Wednesday (November 22)

• Tentative – German 30-year Bond Auction
• 10:00 Eurozone Consumer Confidence. Estimate -1
• 14:00 US FOMC Meeting Minutes

Thursday (November 23)

• 2:00 German Final GDP. Estimate 0.8%
• 3:30 German Flash Manufacturing PMI. Estimate 60.4
• 4:00 Eurozone Flash Manufacturing PMI. Estimate 58.3
• 7:30 ECB Monetary Policy Meeting Accounts

*All release times are GMT

*Key events are in bold

DAX, Wednesday, November 23 at 6:05 EDT

Open: 13,174.50 High: 13,192.50 Low: 13,110.50 Close: 13,120.50

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