DAX pauses from plunge as Eurozone GDP matches forecast

Kenny Fisher MarketPulse

The DAX index has posted slight gains in the Friday session. Currently, the index is at 10,896, up 0.20% on the day. On the release front, German industrial production disappointed with a decline of 0.3%, shy of the estimate of 0.5%. In the eurozone, employment change and revised GDP for the third quarter both came in at 0.2%, matching their estimates. The U.S releases nonfarm payrolls, with the markets braced for a sharp drop to 200 thousand.

Global stock markets have dropped sharply this week. The DAX has plunged 5.55%, and dropped below the 11,000 level on Thursday, for the first time since December 2016. Bank and automaker shares were down sharply on Thursday, as investors continue to fret about the U.S-China trade war. There was some optimism early in the week after President Trump agreed to suspend further tariffs against China for 90 days. However, there are concerns that the two sides will not be able to close the gaps in their positions in just a few weeks. There was more bad news for the markets on Thursday, after a senior Chinese executive, Meng Wanzhou, was arrested in Vancouver for allegedly violating trade sanctions against Iran. Wanzhou faces extradition to the U.S., and China’s indignant response to the arrest could torpedo upcoming trade talks between the two countries. Even if the negotiations get off the ground, they promise to be difficult, which could mean more headwinds for the DAX.

After a tremendous run, the U.S labor market could be losing some steam. Employment data was softer than expected on Thursday. The November ADP nonfarm payrolls was forecast to drop, but the plunge was much sharper than expected. The indicator fell to 175 thousand, missing the estimate of 195 thousand. If the official nonfarm payroll report on Friday misses expectations, equity markets could respond with losses, adding more misery to a dismal week.

Economic Calendar

Friday (December 7)

2:00 German Industrial Production. Estimate 0.3%. Actual -0.5%

5:00 Eurozone Final Employment Change. Estimate 0.2%. Actual 0.2%

5:00 Eurozone Revised GDP. Estimate 0.2%. Actual 0.2%

8:30 US Nonfarm Employment Change. Estimate 200K

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

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