DAX traders have been watching the G20 summit like the rest of us with the usual order of popcorn plus a large side of something strong, straight up. Merkel came out looking strong while the Trump dynasty moved American democracy in a new-old-new familial rule direction when a handbag designer stood in for POTUS at a world leader round table. There’s nothing like a bit of inappropriate nepotism to seal the deal.
Looking ahead, the EURUSD pair is likely to have a strong effect on the DAX across the week as the DAX has a predominance of exporters. This means a strengthening currency could depress things so the flurry of USD activity from Wednesday to Friday could keep markets volatile especially on Thursday when Yellen faces a Q&A session with the Senate Banking Committee.
Looking at the week ahead, key events affecting the Dow include the holiday-shortened week (4th July markets closed) and the G20 summit starting on Friday in Hamburg. Politics reach into trading has never been more apparent than under Trump’s administration and traders will be watching the international summit as closely as Trump’s twitter feed.
The Dow Jones Index finished last week posting its best first half gains since 2009 but ended the week itself down as technology stocks rolled over. But pundits are not concerned as hawkish tones from banking figures, such as Draghi in Europe, have caused bond yields to spike. For the US market, banks are looking strong as the Federal Reserve approved the capital returns programme for the larger institutions. In fact, it’s the first time they haven’t objected to any of the dividend hikes or buybacks for all 34 big banks it reviewed since the stress test was introduced seven years ago. The Dow closed at 21349.63, a 62.20 point change.
Some analysts forecast tight ranges and low volumes so expect a choppy ride.