The DAX index has edged higher on Wednesday. Currently, the DAX is at 11,354, up 0.40% on the day. On the fundamental front, there are no major German or eurozone events. German PPI rebounded with a gain of 0.4%, beating the estimate of -0.2%. Later in the day, eurozone consumer confidence is expected to post a second straight loss of -8 points. In the U.S., investors will be keeping a close eye on the Federal Reserve minutes from the January meeting. Thursday promises to be busy, as Germany and the eurozone will publish service and manufacturing PMIs.

The DAX has held its own in February, as appetite remains steady. At the same time, there are growing concerns about the strength of the German and eurozone economies, as recent key numbers have been lukewarm. The well-respected ZEW economic sentiment surveys remain deep in negative territory, and the February readings underscored the fact that investors and analysts are pessimistic about the economic outlook. Still, there was a silver lining in the German release, as the readings have improved steadily over the past four months – back in October, the score was -24.7 points. In the first quarter of 2018, the readings were in positive territory, as the German economy was performing well. However, optimism then dissipated, as the global trade war intensified and the German economy slowed. It has been a similar story with the eurozone, as ZEW economic sentiment scores have been in negative territory since the second half of 2018. If German numbers remain soft in the first quarter, investor sentiment could sour and send the DAX downwards.

Investors are keeping a close look at U.S-China trade talks, which continue this week in Washington. This is be the fourth round of talks, as the sides look to ease trade tensions after months of tit-for tat tariffs which have hurt global growth and rocked the stock markets. Treasury Secretary Steven Mnuchin joined the talks last week and called the negotiations “productive”. The U.S. has threatened to impose stiff new tariffs on March 1, but on Tuesday, President Trump said that the talks were going well and that March 1 was not a “magical day”. If the March 1 deadline is removed, traders can expect the equity markets to respond with strong gains.

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