The DAX index continues to see red this week. In the Thursday session, the index is at 11,533, down 1.53% since the Wednesday close. In economic news, the ECB will release the accounts of the August policy meeting. Later in the day, the U.S Treasury publishes its semi-annual currency report.
Down, down and down. The downward spiral in global stock markets has turned into a bloodbath, with some European shares falling to 20-month lows. This is the DAX’s lowest level since February 2017. The DAX posted heavy losses overnight, as Asian markets dropped sharply, and has fallen 4.2% this week. The decline is apparent in all sectors, with all but a handful of companies in the red on Thursday.
Investors will be keeping a close eye on the ECB policy meeting accounts, looking for hints as to the timing of a rate hike next year. The ECB has stated that it will not raise rates before the “end of the summer”, which many analysts have interpreted as September 2019. However, that time period is not etched in stone, and the ECB could opt to raise rates earlier, if warranted by economic conditions. Besides inflation, ECB policymakers will have to weigh other factors such as the U.S-China trade war when deciding when to raise interest rates.
Will there be any surprises in the U.S Treasury currency report? The report provides details of global exchange rate policies, as well as a list of countries which are deemed currency manipulators. In the April report, the U.S did not name any of its major partners as currency manipulators. Since then, the Trump administration has imposed some $200 billion in tariffs on Chinese goods. China has retaliated with its own tariffs on U.S goods, and there has been speculation that China could respond to the U.S tariffs by devaluating the Chinese yuan in order to bolster Chinese exports. In 2015 and 2016, the markets dropped sharply on fears that China would implement a major devaluation of its currency. Traders should treat the report as a market-mover.
High hopes give way to steeper slopes
European open – Trump attacks Fed as markets tank
Thursday (October 11)
- 7:30 ECB Monetary Policy Meeting Accounts
- Tentative – US Treasury Currency Report
Friday (October 12)
- 2:00 German Final CPI. Estimate 0.4%
- 5:00 Eurozone Industrial Production. Estimate 0.4%
*All release times are DST
*Key events are in bold
DAX, Thursday, October 11 at 6:15 DST
Previous Close: 11,12 Open: 11,568 Low: 11,532 High: 11,637 Close: 11,533
