The DAX continues to show strong movement this week, and the volatility has continued on Friday. The index has jumped 1.0% on the day, climbing to its highest level since mid-October. Currently, the DAX is at 11,695. In economic news, the focus is on inflation data. German WPI rebounded after two straight declines, posting a gain of 0.3%. In the eurozone, CPI came in at 1.5% and Core CPI gained 1.0%, as both readings matched their estimates.
The Brexit drama is at fever pitch, after parliament voted on Brexit for a third time this week. As expected, lawmakers voted to ask the European Union for an extension on Article 50. Britain is scheduled to depart the E.U. on March 29, so an extension would give the May government some breathing room. However, the uncertainty surrounding Brexit is far from over. It’s unclear how long an extension the E.U. would be willing to grant, although senior E.U officials have said that a year or more would be acceptable. The E.U. will have to reach a consensus from all 27 members, each of whom must vote in favor of an extension to Article 50. Parliament remains deeply divided over Brexit, and Prime Minister May, though badly shaken, hasn’t given up on her withdrawal deal. With more parliamentary votes expected next week, traders should be prepared for more volatility from European stock markets.
Investors are keeping an eye on developments in the U.S.-China trade war. After four rounds of negotiations, the markets were hoping that President Trump and Chinese President Xi might hold a summit in late March. However, it was reported on Wednesday that the two leaders will not meet before April. This has raised concerns that the sides have not managed to resolve their differences. Trump has said that he is not in a rush to reach an agreement, but a deal with China would be a huge victory for Trump ahead of the U.S. election in 2020. If there are further signs that an agreement between the U.S. and China remains elusive, risk appetite could sour and dampen the high-flying DAX.
Thursday (March 14)
- 3:00 German Final CPI. Estimate 0.5%. Actual 0.4%
Friday (March 15)
- 3:00 German WPI. Estimate 0.3%
- 6:00 Eurozone Final CPI. Estimate 1.5%
- 6:00 Eurozone Final Core CPI. Estimate 1.0%
*All release times are DST
*Key events are in bold
DAX, Thursday, March 15 at 7:40 EST
Previous Close: 11,587 Open: 11,631 Low: 11,574 High: 11,719 Close: 11,695
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