DAX Steady on Mixed Eurozone Data

The DAX has inched higher in the Tuesday session. Currently, the DAX is at 13,229.50, up 0.09% on the day. On the release front, Eurozone data was a mix. CPI reports missed their estimates, while Preliminary Flash GDP beat the forecast. On Wednesday, the markets will be keeping a close eye on the Federal Reserve, which will release its monthly rate statement.

The eurozone released key inflation and GDP data, and the results were lukewarm. CPI Flash Estimate edged down to 1.4%, shy of the forecast of 1.5%. Core CPI Flash Estimate dipped to 0.9%, short of the estimate of 1.1%. There was better news from Preliminary Flash GDP, which remained unchanged at 0.6%, above the estimate of 0.5%. Unemployment continues to head lower, dropping to 8.9%. This is the lowest level since March 2009. The ECB has announced that it will begin tapering its asset purchase program, as the eurozone economy has rebounded in 2017. Still, inflation remains persistently below the ECB’s target of around 2 percent. The asset purchase program has been extended to April 2018, but the ECB could implement an extension if economic data tails off or if inflation fails to move upwards.

Euro-Area Inflation Unexpectedly Slows as Economy Powers On

In Germany, retail sales rebounded in impressive fashion, gaining 0.5% after two straight declines. On an annualized basis, retail sales gained 4.1%, indicative of strong consumer spending. Germany Preliminary CPI edged down to 0.0%, shy of the forecast of 0.1%. This follows two consecutive readings of 0.1% and points to continuing low inflation in an otherwise robust economy.

The uncertainty and tension remain at fever pitch in Catalonia. The central government has dissolved the Catalan government and parliament, after imposing direct rule on Catalonia. The Catalan government declared independence just before Madrid invoked Article 155 of Spain’s constitution. The Spanish government has drawn up charges of rebellion against Catalan President Carles Puidgemont, but he has skipped town, and is reportedly in Belgium. It remains unclear what Puidgemont will do next – he could request political asylum or even declare a government-in-exile. Elections have been slated for December 21, and two parties from Puidgemont’s coalition have declared they will participate in the election. With Catalans split down the middle on independence, this saga is likely to continue for some time.

Economic Calendar

Tuesday (October 31)

• 6:00 Eurozone CPI Flash Estimate. Estimate 1.5%. Actual 1.4%
• 6:00 Eurozone Core CPI Flash Estimate. Estimate 1.1%. Actual 0.9%
• 6:00 Eurozone Preliminary Flash GDP. Estimate 0.5%. Actual 0.6%
• 6:00 Eurozone Unemployment Rate. Estimate 9.0%. Actual 8.9%

Wednesday (November 1)

• 14:00 US FOMC Statement

*All release times are GMT

*Key events are in bold

DAX, Tuesday, October 31 at 7:55 EDT

Open: 13,228.50 High: 13,255.38 Low: 13,214.60 Close: 13,229.57

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