DAX steadies after brutal week

The DAX index has posted gains in the Monday session. Currently, the index is at 11,562, up 0.37% on the day. In economic news, it’s a quiet start to the week, with no German or eurozone events. In the U.S, the Treasury Department is expected to release the semi-annual currency report.

It was a dismal week for global equity markets, and the DAX shared in the pain, plunging 4.3 percent. The DAX is in green territory, but Monday’s low of 14,459 marked the index’s lowest level since January 2017. Two key factors in the downward spiral of global markets are the recent spike in U.S bond yields and growing fears about the impact of the U.S-China trade war. If bond yields continue to rise next week, the DAX could face further headwinds this week.

German inflation data was strong in September. CPI climbed 2.3% in September on a year-to-year basis, its strongest gain since November 2011. Not surprisingly, much of the increase is a result of higher energy prices, as Brent crude remains above $80 a barrel. Eurozone inflation has also been moving higher and is finally closing in on the ECB’s target of just below 2 percent. Stronger inflation has reinforced speculation that the ECB could raise interest rates for the first time in years in the second half of 2019.

The ECB made no changes to monetary policy at the September policy meeting, but the minutes indicated that policymakers are worried that global trade tensions could dampen eurozone growth. The ECB debated whether to lower its risk assessment, but in the end decided that the eurozone economy was strong enough to allow the ECB to maintain its ‘slow but steady’ stance of tightening policy. The ECB remains on track to end its massive bond purchase program at the end of the year. Meanwhile, with bond yields pointing higher, investors have reacted negatively and stock markets continue to spin lower. On Thursday, German 10-year bonds fetched 0.55%, marking a 6-month high.

European Open – Markets pare losses into week end

Asia market update

Friday’s relief rally in full swing

Economic Calendar

Monday (October 15)

• Tentative – US Treasury Currency Report

Tuesday (October 16)

• 2:00 German Import Prices. Estimate 0.1%
• 5:00 Eurozone Trade Balance. Estimate15.0B
• 5:00 Eurozone ZEW Economic Sentiment. Estimate -9.2
• 5:00 German ZEW Economic Sentiment. Estimate -12.3

*All release times are DST

*Key events are in bold

DAX, Monday, October 15 at 7:50 DST

Previous Close: 11,523 Open: 11,479 Low: 11,452 High: 11,587 Close: 11,562

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