- Summary:
- The DAX is off to a rough start despite the German GDP report showing that the euro zone's largest economy avoided a technical recession in Q3 2019.
Unlike US equities, the DAX did not enjoy a bullish run in Wednesday’s trading. It opened at 13,258.81 and hit an intraday low at 13,139.79 before it finished with a 0.40% loss at 13,230.20.
Risk aversion continued to dominate market sentiment and the DAX was not spared from the bears’ advances. As reported yesterday, the lack of progress surrounding the US-China trade deal continued to make investors jittery. There’s also no news on the auto tariffs investigation of the US on European-made cars of which the deadline is today.
Currently, the index is trading lower around market open. It’s down around 50 points to 13,179.16 despite positive news from Germany. Data for the third quarter of the year shows that euro zone’s largest economy avoided a technical recession. The German economy grew by 0.1% in the months of July to September, beating the -0.1% forecast.
Chinese Data Weigh On Market Sentiment
The downward pressure is probably because investors are beginning to react to the worse-than-expected Chinese data released earlier.
Industrial production for October printed at 4.7% and missed forecasts for a 5.5% growth rate. Retail sales also disappointed at 7.2% versus the 7.8% consensus. Fixed asset investment grew by 5.2% from a year ago which was less than the 5.4% forecast. These numbers might be putting investors on risk-off mode as they hint that the world’s second-largest economy is realizing the effects of the trade war.
Equities markets today will likely take their cue from updates on trade negotiations. An extension on the auto tariffs investigation allow investors to breathe a sigh of relief. We could see the DAX retest highs around 13,307.82 if risk appetite were to dictate sentiment. On the other hand, it’s going to be another day in the red for the DAX if the Trump administration were to announce a 25% levy on European-made cars. We could see the index test November 4 highs around 12,991.47.Download our latest quarterly market outlook for our longer-term trade ideas.