DAX watch: German equities open higher as euro dips

on Mar 30, 2015

The DAX opened with a surge of confidence today, as the euro dipped and investors looked ahead to the release of US employment data on Friday. A set of strong figures would boost the dollar and pressure the euro, supporting export-focused European companies.

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The DAX was up 0.74 percent at 11,956.30 points as of 08:06 BST. The Frankfurt exchange’s blue chip index lost about 1.3 percent last week, as the stronger euro and volatile oil prices weighed on sentiment. Meanwhile, the Dow Jones Euro Stoxx 50 gained 0.61 percent to 3,702.50 points, after it also dropped about one percent last week.
The main story this week is likely to be the dollar again. On Friday the greenback logged a minor drop against the euro, closing nearly 0.5 percent lower on the week, as US Q4 GDP final figures were below expectations at 2.2 percent annual growth. As of 08:27 BST today, the euro stood 0.48 percent down against the dollar at 1.0838.
Investors are now eyeing crucial US payrolls data, due for release on Friday. The closely-monitored non-farm payrolls are projected to have increased by 244,000 in March, down from a rise of 295,000 in February. A better-than-expected number could send the greenback surging again, as a June rate hike by the Federal Reserve would be back on the cards.
The euro and the dollar have a very strong inverse correlation, hence a rising dollar tends to pressure the euro, boosting margins for export-oriented EU companies.
Leading up to the payrolls figures, data on EU business and consumer confidence and consumer inflation as well as US home sales, consumer confidence and manufacturing data will be posted.
Another key event for investors this week will be the ongoing talks between Greece and European finance ministers. Progress towards agreeing further cash for the beleaguered country was lacklustre last week, and the Greek government is running short on time to shore up financing. Some reports claim that the country will run out of cash by the end of April, and it has a number of maturing debt payments due in May and August.
Investors will also be keeping a close eye on oil prices, after a volatile last week when both Brent and West Texas Intermediate traded in a range of over 10 percent, finally closing with small intraweek losses. Fighting in Yemen had spurred fears that a key oil shipment route for Middle East oil could be closed, sending crude oil prices higher and hurting transport companies, with airlines losing the most.
No DAX constituent companies were in the red as of 08:32 BST today, with car-parts manufacturer Continental standing as the top gainer, adding 2.69 percent to €221.825. Other big gainers were semi-conductor manufacturer Infineon, which climbed 2.77 percent to €11.123 and car maker BMW, which added 1.85 percent to €118.250.


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