The DAX index has started the week with slight gains. In the Monday session, DAX is trading at 12,863.25, up 0.27% on the day. On the release front, German Final Manufacturing PMI improved to 60.6, matching the forecast. In the Eurozone, Final Manufacturing PMI improved to 58.1, just shy of the estimate of 58.2 points. On Tuesday, the eurozone releases the Producer Price Index, which is expected to edge up to 0.1%.
There was drama and violence in the Spain on the weekend, as Catalonia, one of the richest regions in Spain held a referendum on independence. However, the vote was marked by street battles and widespread violence between voters and police. The national government banned the referendum, and police used tear gas and rubber bullets in against defiant voters, causing over 800 casualties. Catalonian officials claimed that 90 percent of voters had voted for independence. The Catalan regional government is holding an emergency meeting on Monday to discuss what steps it will take regarding independence, setting up the stage for a full-blown constitutional crisis with Madrid. Although, the drama in Spain is not expected to have a serious impact on the eurozone nervous investors reacted to the news on Monday by selling euros in favor of the dollar and Swiss franc.
The eurozone economy continues to hum in 2017, and the manufacturing sector has rebounded, thanks to a stronger global economy which continues to show strong demand for European products. German and Eurozone Final Manufacturing PMIs both improved in September, with the German indicator recording its strongest reading since April 2011. The labor market also has been improving. The eurozone unemployment rate remained at 9.1%, just below the estimate of 9.0%. Better economic conditions have led to louder calls for the ECB to tighten its monetary policy, particularly from Germany, where officials feel that that the robust economy needs tighter policy. However, the ECB must take into account those member countries that are lagging behind Germany, and ECB President Mario Draghi reiterated last week that the ECB had not made any plans to taper its asset purchase program. On Wednesday, Germany and the eurozone release Services PMIs, with both indicators expected to show expansion.
