The DAX index continues to roll and has posted gains of 1.2 percent this week. On Wednesday, the DAX is at 12,148, up 0.39% on the day. In economic news, eurozone CPI dipped to 0.8%, matching the forecast. The eurozone trade surplus jumped to EUR 19.5 billion in February, its highest level since April. On, Thursday, Germany and the eurozone release services and manufacturing PMIs.
The German manufacturing sector have taken a beating, courtesy of the global trade war which has dampened demand for German exports and hurt the country’s massive auto industry. This has resulted in recent declines in manufacturing PMI reports. The markets are braced for another soft score for March, with an estimate of 45.2 points. The services PMIs have been indicating healthy expansion, but more bad news from manufacturing could unnerve investors and send the euro downwards.
Investors reacted positively to a milestone reading from the German ZEW economic sentiment survey. The key indicator had been mired in negative territory for the past 12 months, and finally climbed into territory in April. The score of 3.1 points to slight optimism on the part of institutional investors and analysts. The eurozone indicator showed a similar trend, climbing to 4.5 points, its first gain since May. The improvement in investor mood is attributable to the Brexit extension, which will give the parties time until October to try to reach a resolution to the deadlock. The ZEW said that investors were hopeful that the global economy would develop “less poorly” than expected. At the same time, eurozone growth remains weak and Germany is expected to cut its growth forecast for 2019, a result of a drop in exports.
