HomeContributorsFundamental AnalysisDAX Ticks Lower As Markets Digest Brexit Vote

DAX Ticks Lower As Markets Digest Brexit Vote

The DAX is steady in the Wednesday session. Currently, the DAX is at 11,515, down 0.04% on the day. On the release front, eurozone industrial production was better than expected. The indicator jumped 1.4%, above the estimate of 1.0%.

The Brexit drama is in high gear this week, and investors are closely monitoring developments. On Tuesday, parliament again rejected the government’s withdrawal proposal by a huge margin, despite extensive lobbying by Prime Minister May. Many conservative lawmakers remain skeptical about the Irish backstop proposal, suspicious that the provision will prevent Britain from departing from the European Union. The action continues, with parliament voting on a no-deal Brexit on Wednesday. If this proposal is rejected, lawmakers would vote on Thursday on a request to extend Article 50, the mechanism for Brexit. However, it’s far from clear how long the delay would last, or if the E.U. would agree to an extension. Markets are allergic to uncertainty, and the chaos surrounding Brexit could trigger some volatility in European markets in the second half of the week.

The eurozone manufacturing sector has struggled, but there was some positive news on Wednesday, as the reading of 1.4% was the strongest gain since August 2017. Germany, the largest economy in the eurozone, has been posting weak manufacturing data. 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.

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