The DAX is showing little movement in the Friday session. Currently, the DAX is at 13,119, up 0.03% on the day. On the release front, German inflation indicators were unexpectedly stronger. PPI and WPI both improved to 0.5%, beating their estimates. In the eurozone, the numbers were mixed. The current account surplus narrowed to 32.0 billion, short of the estimate of EUR 35.1 billion. The trade balance surplus edged up to EUR 21.1 billion, above the forecast of EUR 20.7 billion.
German inflation indicators showed strong improvement in April. PPI improved from 0.1% in March to 0.5% in April, and WPI followed the same trend, climbing from 0.0% to 0.5%. These figures come on the heels of German CPI, which fell from 0.4% to 0.0%. The eurozone economy continues t0 perform well in 2018, but inflation has lagged behind and remains well below the ECB inflation target of around 2 percent. Weak inflation levels could have a significant impact on ECB fiscal policy, as policymakers may have to consider extending its stimulus scheme, which is scheduled to run until September. At the same time, higher oil prices could boost weak inflation levels. Brent crude hit $80 earlier this week, and the upward trend could continue as renewed U.S sanctions against Iran could hamper its oil exports.
The DAX hasn’t been making headlines, but the index continues to gain ground. The DAX is currently trading at its highest levels since the end of January. Investors continue to give a thumbs-up to the robust German economy, but there are some clouds on the horizon. A growing concern is the rising price of crude, which has crossed above the $80 level. Rising oil prices could trigger higher inflation and hamper economic growth, which could send the markets lower.
