DAX Posts Gains, Investors Eye U.S. Consumer Inflation

The DAX index has posted gains in the Thursday session. Currently, the DAX is at 12,983 points, up 0.31% on the day. In economic news, German and French banks are closed for a holiday. The ECB released an economic bulletin and the US will publish consumer inflation reports. CPI is expected to rebound with a gain of 0.3%, while Core CPI is expected to remain unchanged at 0.2%. On Friday, ECB President Mario Draghi will speak at an event in Florence

The ECB continues to send a message of cautious optimism to the markets, and this was underscored by the ECB Economic Bulletin. The report stated that the eurozone economy continues to show “solid and broad-based expansion” but did acknowledge that growth in the first quarter slowed. As for inflation, policymakers remain confident that inflation will continue to move towards the inflation target of 2 percent. However, inflation remains subdued and has not shown signs of an upward trend. The report reaffirmed that the ECB plans to maintain interest rates at current levels for an “extended period of time, and well past the horizon of the net asset purchases.”

European stock markets are showing a muted reaction to President Trump’s dramatic speech on Tuesday. Trump announced that the US would withdraw from the Iran nuclear deal. Trump blasted the agreement and said that the US would impose stiff sanctions on Iran. However, Britain, France and Germany have said they plan to remain in the deal, and will be holding a high-level meeting with Iranian leaders on how the agreement can be salvaged. With the US acknowledging that the White House does not have a ‘Plan B’, it’s unclear what happens next. Meanwhile, tensions between Israel and Iran remain high, after several Israeli airstrikes in Syria caused Iranian casualties. Any confrontation between the two could shake up the markets.

Economic Fundamentals

Thursday (May 10)

• 4:00 ECB Economic Bulletin
• 8:30 US CPI. Estimate 0.3%
• 8:30 US Core CPI. Estimate 0.2%

Friday (May 11)

• 9:15 ECB President Mario Draghi Speaks

*All release times are DST

*Key events are in bold

DAX, Thursday, May 10 at 6:50 DST

Prev. Close: 12,943 Open: 12,971 Low: 12,959 High: 13,034 Close: 12,981

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