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DAX Moves Higher After Rough Week

Mar. 05, 2018 8:55 AM ETFXE
Dean Popplewell profile picture
Dean Popplewell

By Kenny Fisher

The DAX index has started the week with considerable gains. In the Monday session, the index is trading at 11,998.58, up 0.70% since the Friday close. On the release front, Eurozone indicators were a disappointment. German and Eurozone Services PMIs dropped in February and missed their estimates. Still, both indicators continue to point to expansion. Elsewhere, Sentix Investor Confidence dropped to 24.0, well off the estimate of 31.1 points. This was its weakest reading since April 2017. Retail Sales declined 0.1%, shy of the estimate of +0.3%. This marked a third decline in the past four months, raising concerns about consumer spending in the eurozone.

It was a dreadful week for the DAX, which slipped 4.6% if its value. European stock markets reacted negatively following US President Trump's decision to impose stiff tariffs on steel and aluminum imports in order to protect domestic producers. Under the new scheme, foreign steel will be taxed at 25% and aluminum at 10%. The response to the move was overwhelmingly negative, both abroad and in the US. China and the EU immediately denounced the move and US auto makers and oil and gas producers also condemned the tariffs. In imposing the tariffs, Trump relied on a provision which allows such measures for national security, but clearly, US trading partners will not quietly accept these protectionist measures. If these countries retaliate, a nasty trade war could ensue, which would likely unnerve investors and send the markets even lower.

The Federal Reserve was in the spotlight last week, as Jerome Powell delivered his maiden speeches to Congress last week. Next up is the ECB, as policymakers meet on Thursday. Will Draghi & Co. deliver more of the same? The markets will be paying close attention to the language used by ECB, as there is a possibility of removing the easing bias regarding

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Dean Popplewell profile picture
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.

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