After posting strong gains last week, the DAX index continues to rally on Monday. Currently, the DAX is at 11,492, up 0.31% on the day. It’s a very quiet start to the week, with no eurozone or German events. On Tuesday, Germany releases GfK Consumer Climate.
The DAX climbed 1.40% last week, buoyed by stronger risk appetite. Investors are increasingly optimistic that the U.S-China trade talks will culminate with an agreement. On Sunday, President Trump waved off the threat of raising tariffs against China on March 1. Trump tweeted that the sides had made substantial progress, and if that trend continued, he would meet with Chinese President Xi. Chinese stocks jumped on the news and European stock markets are higher on Monday. A hold on new tariffs is great news for carmakers, which responded with sharp gains on the DAX. Volkswagen has jumped 2.81%, Daimler has climbed 2.23% and BMW is up 1.37%.
The news has been positive with regard to the U.S-China trade deadlock, but domestically, the numbers remain weak. German data disappointed last week, raising concerns that after a slowdown in the fourth quarter, Q1 will also be a soft quarter. On Friday, Germany’s fourth-quarter GDP showed no change, after a contraction of 0.2% in the third quarter. The Ifo Business Climate survey slowed for a sixth successive month, indicating concern in the business sector about the country’s economic outlook. Manufacturing and inflation data also disappointed. The manufacturing PMI contracted for a second straight month, while German CPI declined in January for the first time in a year. If the weak numbers continue, investor risk appetite could fall and weigh on the DAX.
