The DAX index has started the week with gains. In the Monday session, the DAX is at 12,824, up 0.45% on the day. There are no German or eurozone events on the schedule. On Tuesday, Germany and the eurozone release ZEW Economic Sentiment.
European stock markets are in positive territory on Monday, despite a remarkably acrimonious G-7 meeting. The summit in Quebec lived up to the negative hype, as the “G-6 +1” was the scene of sharp disagreements between U.S President Trump and the other six leaders. Trump openly clashed with the other leaders over his recent tariffs against the European Union and Canada and pulled back his endorsement of the traditional post-summit statement put out by the other members. The undiplomatic Trump also tweeted that Canadian Prime Minister Trudeau, who hosted the summit, was “dishonest and weak”. Canada and the EU are furious over recent US tariffs, especially because of Trump pushed them through on the basis of ‘national security’. The glaring cracks in G-7 unity could cast a long shadow on trade relations between the U.S and the “G-6”, with business confidence and capital spending at risk if the tariff spat continues.
The ECB hold its next policy meeting on Thursday, and the markets will be looking for any clues with regard to the ECB’s asset-purchase program. Currently, the bank is purchasing EUR 30 billion/mth, and the scheme is scheduled to wind up in September. However, some ECB policymakers want to phase out the program slowly, rather than turn off the tap completely in September. ECB Chief Economist recently said that the ECB board members would conduct a detailed discussion about the fate of the stimulus package at the June meeting. The head of the German central bank, Jens Weidmann, weighed into the discussion last week, saying that the markets expected the stimulus program to wind down before the end of the year and that such expectations were “plausible”. ECB head Mario Draghi will likely make mention of the program at his press conference following the Thursday meeting, so traders should be prepared for some volatility from EUR/USD on Thursday.
