The DAX index has paused on Monday, after posting strong gains last week. Currently, the DAX is at 12,311, down 0.03% on the day. There are no major German or eurozone events on the schedule. On Tuesday, Germany releases CPI and the eurozone posts GDP.
The Spanish election was closely watched by the European markets, but market reaction was muted on Monday. Prime Minister Pedro Sanchez led his Socialist party to victory, but he will have to share the spoils in order to form a new government. The Socialists won 123 seats of the 350 seats in Congress, and should be able to form a stable coalition in the next few weeks. The far-right VOX party made gains and will enter parliament, but investors appeared satisfied that the eurozone’s fourth-largest economy will remain politically stable.
Is a U.S-China trade deal imminent? Negotiations will continue on April 30, in Beijing, and U.S. Treasury Secretary Mnuchin waxed positive on Sunday, saying that the talks were in their “final laps”. However, Mnuchin cautioned that the talks could still end without an agreement. The nasty trade war between the two largest economies in the world has rocked the global economy and curbed growth. If the sides can hammer out an agreement, investor risk appetite would likely soar and boost equity markets.
Recent German numbers have been lukewarm, as the eurozone’s largest economy is experiencing a slowdown. This has weighed on the euro, but the blue-chip DAX index shows no signs of slowing down. The index has soared in April, with gains of 6.8%. This is on track for the highest monthly gain since December 2016.
