The DAX index has steadied on Wednesday, after posting sharp gains in the Tuesday session. Currently, the DAX is trading at 12,615 points, up 0.25% on the day. On the release front, the focus is on eurozone inflation indicators. Eurozone Final CPI is expected to climb to 1.4%, while Final Core CPI is forecast to remain unchanged at 1.0%.
The recent trade battle between the US and China has been overshadowed by events in Syria, but the threat of further tariffs between the world’s largest two economies could again roil the stock markets Another salvo in the escalating trade war was fired on Tuesday, as China slapped a tariff of some 179% on US sorghum crops, which is a livestock feed. China imports about $1 billion of sorghum annually, and if the tariff remains in place, will essentially halt US exports of sorghum to China. The Chinese government has threatened to impose tariffs on US soybean exports, valued at some $12 billion each year. If the US administration decides to retaliate, the specter of an ugly trade war between the US and China could spook investors and send global markets into a tailspin.
The German and eurozone economies have looked solid in 2018, making soft ZEW Economic Sentiment reports for April all the more surprising. The April reports were much weaker than expected, but investors shrugged off the numbers as risk appetite has improved. The German release of -8.2 points showed pessimism on the part of institutional investors and analysts and marked the weakest reading since November 2012. The eurozone release of 1.9 was the lowest since July 2o16. The readings are a major disappointment, as the eurozone economy has been performing well and key indicators have been steady. Investors will be hoping that these ZEW releases are one-time blips and that the May readings will be in line with recent releases.