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DAX Dips as Investors Eye Crucial Brexit Vote

The DAX has posted slight losses on Tuesday. Currently, the DAX is at 11,517, up 0.24% on the day. On the release front, there are no German or eurozone events. On Wednesday, the eurozone releases industrial production.

With no fundamentals out of Germany or the eurozone, much of the market focus is on the Brexit saga. Asian markets climbed on Tuesday, after Prime Minister May said she had secured “legally binding” changes to the withdrawal agreement, which will be brought before parliament later on Tuesday. However, the DAX was unable to consolidate the gains, and is in red territory in the European session.

May said that the changes would allow the U.K. to cancel the backstop arrangement over Ireland, but it’s questionable if this will be enough to sway Conservative MPs, many who fear that the backstop will prevent the U.K. from getting out of the European Union. If the vote on withdrawal is rejected by lawmakers, the next step is one on a no-deal Brexit, and the second on requesting the EU to extend Article 50 and delay Brexit past March 29. With the crucial vote(s) in parliament looming, traders should be prepared for stronger movement from the DAX during the week.

The German manufacturing sector continues to post dismal numbers. Industrial production fell 0.8% in January, missing expectations. The indicator managed only two gains in the second half of 2018 and has started 2019 with a decline. Last week, factory orders plunged 2.6%, marking a third successive decline. The U.S-China trade war has dampened global growth, which has reduced the demand for German exports and weighed heavily on manufacturing activity. Eurozone manufacturing has also struggled, and the negative trend is likely to continue if there is no breakthrough in the U.S-China trade talks.

MarketPulse
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