DAX Stems Slide, Markets Eye ECB Statement

The DAX index has steadied in the Thursday session, after recording sharp losses in Wednesday trade. Currently, the DAX is trading at 12,437 points, up 0.12% on the day. On the release front, German GfK Consumer Confidence edged down to 10.8, close to the estimate of 10.9 points. Later in the day, the ECB releases a rate statement, with ECB President Mario Draghi following up with a press conference. On Friday, the US releases Advance GDP for the first quarter.

European stock markets were in red territory on Wednesday, as higher bond yields saw investors ditch equities in favor of US bonds. Treasury notes have hit 4-year highs this week. On Wednesday, 10-year US Treasury notes climbed to 3.015%, and 2-year bonds have increased to 2.504 percent. With inflation appearing to be on the rise, there are stronger expectations that the Federal Reserve will raise rates four times in 2018, which is making bonds more attractive at the expense of the stock markets.

The ECB will be on center stage on Thursday, with a rate state announcement and a Mario Draghi press conference. Eurozone indicators have softened in recent weeks, raising concerns that ECB President Mario Draghi could sound dovish about the eurozone economy. At the March meeting, policymakers made a minor move and dropped a pledge to increase stimulus if needed. The ECB has said it intends to continue bond purchases until at least September and will maintain interest rates at current levels until “well past” the end of the program. Traders shouldn’t expect any dramatic moves at the policy meeting, as the bank will likely continue to preach patience and prudence as it continues to gauge economic activity in the eurozone.

Currency markets yield to dollar demand

Focus on Draghi – ECB to be Positive

Economic Fundamentals

 Thursday (April 26)

• 2:00 German GfK Consumer Climate. Estimate 10.9. Actual 10.8
• 7:45 ECB Minimum Rate. Estimate 0.00%
• 8:30 ECB Press Conference

 Friday (April 27)

• 2:00 German Import Prices. Estimate 0.1%
• 3:55 German Unemployment Change. Estimate -15K
• 8:30 US Advance GDP. Estimate 2.0%

*All release times are DST

*Key events are in bold

DAX, Thursday, April 26 at 7:45 DST

Prev. Close: 12,422 Open: 12,411 Low: 12,381 High: 12,465 Close: 12,437

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