The DAX has lost ground in the Thursday session, after strong gains on Wednesday. Currently, the DAX is trading at 12,205.00, down 0.33% since the Wednesday close. On the release front, German Factory Orders declined 3.9%, weaker than the estimate of -1.9%. This marked the steepest decline since January 2017. Later in the day, the ECB releases its rate decision, followed by a press conference with Mario Draghi.
Global stock markets have been volatile since lat week, when US President Trump stunned investors last week when he proposed stiff tariffs on steel imports, much to the consternation of the European Union and other US trading partners. Fears of a trade war sent the DAX sharply lower last week, with losses of 5.2%. The DAX has clawed back some of the losses this week, as Republican lawmakers, including House Speaker Paul Ryan, have come out strongly against the move. This has raised hopes that Trump will back down. However, the unpredictable president could barrel ahead and impose the tariffs, which would likely send global stock markets lower. There was further drama on Wednesday, as Gary Cohn, Trump’s chief economic adviser, resigned. Cohn was a strong advocate of free trade, so his resignation could weaken opposition in the White House to the tariffs. Will Trump make good on his threat or back off? Until the situation is resolved, traders should be prepared for continuing volatility in the markets.
