The DAX index is steady in the Thursday session, after sharp losses on Wednesday. Currently, the DAX is at 12,951, down 0.21% on the day. On the release front, Germany Final GDP dropped to 0.3%, matching the estimate. GfK Consumer Climate ticked lower to 10.7, just shy of the forecast of 10.8 points. Next up, the ECB will publish the minutes of its April policy meeting. On Friday, Germany releases Ifo Business Climate.
PMI reports disappointed on Wednesday and German stock markets responded with sharp losses. The DAX declined by 1.3 percent. Investors are particularly concerned that both German and eurozone manufacturing PMIs dropped for a fifth straight month. German Manufacturing PMI posted its weakest gain in 16 months, while the eurozone indicator posted its worst reading in 18 months. These numbers, while certainly disappointing, should not cause any alarm, as the PMIs continue to indicate expansion in the services and manufacturing sectors. Still, the fact that growth was softer than expected could give ECB policymakers reason to re-evaluate the planned wind-up of its stimulus program in September.
Earlier this week, US President Trump sounded skeptical over progress in trade talks between the US and China. On Tuesday, Trump said that he was ‘not really’ satisfied with the negotiations. Trump’s comments have confused the markets, as Treasury Secretary Steven Mnuchin declared on the weekend that the trade spat was ‘on hold’. Investor risk appetite has also waned as there is uncertainty whether North Korean leader Kim Jong-un will meet with President Trump next month. On Tuesday, Trump acknowledged that there was a ‘substantial’ chance that the summit planned with Kim in Singapore on June 12 would not take place.
