RESTRUCTURING IN GERMANY’S UTILITY SECTOR LIFTS DAX
Germany’s DAX index, which is made up of the largest companies in the country gained by almost 0.50% today. The gain was attributed to news that the country’s largest utilities companies were starting to consolidate. Power company, Innogy was up by 12% after its parent company RWE and rival E.ON announced that they would break up the company and divide its assets. Auto companies like VW were also higher after reports emerged that the European Union was in talks with the United States about exemption in the new tariffs.
Gold prices fell by half of a percent to trade at $1,317 per ounce. The fall came at the backdrop of a government report that showed lagging wage growth. On Friday, reports from the Bureau of Labor Statistics showed that the country added more than 313K jobs. Participation rate increased and the U6 number was in line with expectations. However, the report showed that wages were not growing, which is the opposite of what the Phillips Curve is supposed to do. A stronger dollar tends to cause the price of fall.
The Euro remained subdued against the major currency pairs. It was down by 0.05%, 0.27%, and 0.28% against the dollar, pound, and yen respectively. This fall happened amidst thin trading, as traders wait for the resolution of trade issues between the EU and the US. In the morning, Trump tweeted that his treasury secretary Wilbur Ross would meet with EU officials to talk about tariffs and trade.
The pair is currently trading at 1.2300 level and struggling to find direction. This is because traders are waiting for the inflation data from the US and the EU. The US data will come on Wednesday while the European one will come on Friday. At this point, traders may prefer to wait and see before initiating trades on this pair.
The Gold Dollar pair is currently trading at $1,318. This level presents an important support to the pair as traders wait for inflation data from the United States. The stagnant wages data released was an indication that inflation is not yet growing. Nonetheless, like we have seen in the past, the immediate wage numbers have not always moved in tandem with the inflation numbers.
The DAX index is currently trading at £12,400. This is significantly higher than the £11,726 level where the index was when Trump announced new tariffs. The rise is a result of the easing of inflation fears and with Trump showing signs of flexibility on tariffs. This means that the index could surge to the monthly high of £12,600.