DAX Climbs as Investors Ignore Spike in US Consumer Inflation

The DAX index has posted strong gains in the Thursday session. Currently, the index is trading at 12,453.00, up 0.92% since the Wednesday close. In the eurozone, trade surplus continues to grow, climbing to EUR 23.8 billion. This beat the forecast of EUR 22.4 billion. On Friday, Germany releases the Wholesale Price Index, which is expected to rebound with a gain of 0.2%.

European stock markets are higher on Thursday, as company earnings from major European corporations have been strong. The bank sector has posted strong gains, and this is reflected in bank shares on the DAX – Commerzbank is up 2.39%, and Deutsche Bank is close behind at 2.04%. It has been a blue February for the DAX, which has slipped 5.9%, as global stock markets endured a sharp correction last week. This week has seen some improvement, and US markets were up on Wednesday, despite soft retail sales as well as higher inflation. The recent sell-off was triggered by concern that stronger inflation would lead to an acceleration in rate hikes. So far, the stronger CPI numbers out of the US have not spooked investors.

The recent stock market turbulence has triggered volatility in the currency markets, and this is causing concern at the ECB. Last week, ECB President Mario Draghi said that he is more confident that eurozone inflation is moving closer to the Bank’s target of just below 2 percent, due to improving economic growth. However, Draghi listed currency market volatility as an obstacle to the inflation target, and added that the ECB would carefully monitor the euro’s exchange rates. The ECB tapered its massive stimulus program from EUR 60 billion to 30 billion/mth in January, and the markets are on the lookout for hints as to whether the ECB will normalize policy and wind up stimulus in September.

Economic Calendar

Thursday (February 15)

• 5:00 Eurozone Trade Balance. Estimate 22.4B. Actual 23.8B

Friday (February 16)

• 2:00 German WPI. Estimate 0.2%

*All release times are EST

*Key events are in bold

DAX, Thursday, February 15 at 6:00 EDT

Open: 12,446.00 High: 12,480.28 Low: 12,400.69 Close: 12,453.00

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