It’s been a disappointing week for the DAX, as the index has declined 1.2 percent. The DAX continues to point down on Friday, as the index is at 13,038.00, down 0.23% on the day. On the release front, there is just one eurozone indicator. The eurozone trade surplus fell to EUR 19.0 billion, well off the estimate of EUR 24.4 billion. This marked a 3-month low.
There were no surprises from the ECB on Thursday, as policymakers held interest rates at a flat 0.00%. Investors were more interested in follow-up comments from ECB President Mario Draghi. In his press conference, Draghi sounded optimistic about economic conditions in the eurozone, noting that that ECB projections were “going in the right direction”. Still, there was a caveat, as Draghi added that “an ample degree of monetary stimulus remains necessary”. The ECB raised its forecasts for growth and inflation, but this clearly wasn’t enough to coax the cautious Draghi to signal another taper of the Bank’s ultra-loose stimulus program. Some policy makers favored signalling a change in policy if inflation continues to move higher, but the majority favored staying the course, which means the ECB will continue buying bonds till September 2018 (or later) and will keep interest rates at record lows even lower.
German indicators sparkled on Thursday, although this wasn’t enough to stem the DAX losing ground. Manufacturing PMI hit a new record, climbing to 63.3 points. The PMI Composite Output Index, which measures business activity, improved to 58.7, its highest level since 2011. A robust German economy has been the locomotive for the eurozone, which has rebounded in 2017 with stronger growth and lower unemployment.
