German DAX Index fluctuated near its highest level, similar to the global indices. The week ended at EUR24.290. This is a few points lower than the high for the entire year of EUR24.635. The price of this index is 33% higher than its April low. The top three catalysts of the Index this week are listed below.
European Central Bank (ECB) decision
The decision of the European Central Bank on Thursday will have a major impact on the German DAX. The bank is expected to keep interest rates at 2.15 %. It will be the very first time they have been left unchanged for such a long period of time.
The DAX, and other European indices will not be affected by the decision to keep rates at their current levels. What will actually move the DAX and other European indices is what we expect to see later in this year. Analysts expect the bank to keep rates the same, so signs that it will reduce rates are positive for the DAX Index.
German Corporate Earnings
Reports from many constituent companies will also be a key factor in the DAX Index. SAP, its largest constituent company, will release results on 22 July.
The results of this company are noteworthy because they are one of the largest European companies, and also major competitors to American giants such as Amazon and Microsoft.
Read more: SAP’s share price could crash as low as EUR208 in the near future
The largest bank in the United States, Deutsche Bank is another company worth watching. The results of the company will be released at a moment when its shares are on a steady rise, similar to other European banks.
Volkswagen, MTU Aero Engines and Satorius are the other DAX Index firms that will be publishing their results. VW’s results are also noteworthy, as they will give more insight into the effects of Donald Trump’s tariffs against German cars.
The DAX Index also responds to some of America’s biggest companies, such as Microsoft and Tesla. These are American companies, but they have an impact on the global indexes.
The DAX is also influenced by the reports of other large European companies such as LVMH BNP Paribas and Thales.
Trade talks between the US and Europe
As the deadline of August 1st approaches, the other major catalyst for the DAX Index are the ongoing negotiations between the US and European Union.
According to a recent report by the FT, the US is still pushing for a minimum of 15%-20% on European products. This is a much higher threshold than the 10% minimum tariff the US agreed with the UK.
Trump has repeatedly criticized the European Union for its significant $231 billion surplus in trade with the US. Trump has complained for years that the EU is selling so many products to the US, but not buying US made cars or agricultural goods.
Trump has rejected the EU’s offer of zero to zero tariffs with the US due to other non-tariff obstacles. The DAX Index will rise if a trade agreement with the EU is reached.
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