DAX recovers from sharp losses, eurozone CPI creeps higher

The DAX index has posted small gains in the Wednesday session, recovering from the sharp losses on Tuesday. In the North American session, the DAX is trading at 11,436, up 0.17% on the day. In economic news, German retail sales posted a gain of 0.1%, missing the estimate of 0.5%. In the eurozone, CPI Flash Estimate and Core CPI Flash Estimate both edged higher in October, with readings of 2.2% and 1.1%, respectively. These releases both matched the estimates. As well, the eurozone unemployment rate remained pegged at 8.1%, matching the forecast.

In Germany, retail sales remained soft, posting a gain of 0.1% in September. This ended a streak of two declines. The eurozone economy is also worrying policymakers. Economic performance has softened in the third quarter, as Preliminary Flash GDP dipped to 0.2%, down from a 0.4% gain in the second quarter. On an annualized basis, Q3 growth was 1.7%, down from 2.2% in the second quarter. Much of the slowdown can be attributed to the crisis over the Italian budget, which was rejected by the European Commission since it breached EU regulations over debt limits. Is confidence waning in the eurozone economy? European Commission reported that economic confidence fell in the eurozone for a tenth straight month. The indicator dropped sharply to 109.8, down from 110.9 points a month earlier.  Confidence is lower in the manufacturing and services industries, and retail services managers reported “much grimmer views on the present and expected business situation”. Economic confidence has fallen in Germany, France and Italy, which could translate into further headwinds for the euro in the fourth quarter.

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Economic Calendar

Tuesday (October 30)

• 2:30 French Flash GDP. Estimate 0.4%. Actual 0.4%
• All Day – German Preliminary CPI. Estimate 0.1%
• 3:45 French Consumer Spending. Estimate -0.4%. Actual -1.7%
• 4:00 Spanish Flash CPI. Estimate 2.3%. Actual 2.3%
• 4:55 German Unemployment Change. Estimate -12K. Actual -11K
• 5:00 Italian Preliminary GDP. Estimate 0.2%. Actual 0.0%
• 6:00 Eurozone Preliminary Flash GDP. Estimate 0.4%. Actual 0.2%
• 6:14 Italian 10-year Bond Auction. Estimate 3.36/1.5
• 9:00 US S&P/CS Composite-20 HPI. Estimate 6.0%
• 10:00 US CB Consumer Confidence. Estimate 136.3

Wednesday (October 31)

• 3:00 German Retail Sales. Estimate 0.5%
• 6:00 Eurozone CPI Flash Estimate. Estimate 2.1%
• 6:00 Eurozone Core CPI Flash Estimate. Estimate 1.0%
• 8:15 US ADP Nonfarm Employment Change. Estimate 190K

*All release times are DST

*Key events are in bold

DAX, Wednesday, October 31 at 7:45 DST

Previous Close: 11,287 Open: 11,29 Low: 11,392 High: 11,486 Close: 11,426

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