DAX above 11,000 as risk sentiment jumps after shutdown breakthrough

The DAX index has edged lower in the Monday session, after posting sharp gains on Friday. Currently, the index is at 11,257, down 0.25% on the day. In economic news, there are no major eurozone or German events. ECB President Mario Draghi will testify before the European Parliament Economic and Monetary Affairs Committee. The markets will be looking for hints about future monetary policy, and Draghi’s remarks should be considered a market-mover.

German stock markets moved higher on Friday, with the DAX climbing to its highest gains since early December. The catalyst for the upward movement was a surprise development in the U.S shutdown, the longest ever. President Trump agreed to reopen government services for a 3-week period, even though he did not receive any funds for his border wall with Mexico. Risk sentiment has jumped, as investors are optimistic that the temporary deal will lead to an agreement which resolves the shutdown.

German numbers continue to worry investors. On Friday, German Ifo Business Climate dipped to 99.1, below the 100-level for the first time since 2010. Earlier in the week, a ZEW survey found that institutional investors remain deeply pessimistic about the German and eurozone economies. There was also grim news from the manufacturing front, as German manufacturing PMI slipped to 49.9, falling into contraction territory for the first time since 2013. As the largest economy in the eurozone, Germany is a bellwether for the rest of the bloc, and if the soft numbers continue, investors could lose their enthusiasm for the euro.

Economic Calendar

Friday (January 25)

  • 4:00 German Ifo Business Climate. Estimate 100.7. Actual 99.1

*All release times are DST

*Key events are in bold

DAX, Monday, January 28 at 6:40 EST

Previous Close: 11,281 Open: 11,237 Low: 11,214 High: 11,276 Close: 11,257

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