The German stock index DAX futures were 2.04 percent higher at 12,162 in European hours on Tuesday, with market players monitoring the political front.
The benchmark closed sharply higher on Monday at 12,090.87, adding 177.16 points and 1.49 percent, amid an improving market sentiment in the light of upbeat political news.
Over the weekend, Germany’s SPD voted in favor of a coalition government with Angela Merkel, putting an end to nearly half a year of political uncertainty over Europe’s first economy.
The impact of political news was strong, because the DAX was able to recover even when economic reports were not particularly supportive. German and Eurozone PMI indexes for the services sector both missed expectations, while the Sentix Investor Confidence fell to 24.0, compared to a forecasted 31.1 points, the weakest level since April 2017.
In other news, retail sales notched down 0.1 percent, against an estimated 0.3 percent build. This was the third decline in four months, which adds to concerns over consumer spending in the bloc. That trend could also weigh on expectations for higher inflationary pressure.
Last week, the DAX ended 4.6 percent to the downside as market players continued to close their long bets on the index ahead of SPD’s vote, Italian parliamentary elections and as President Donald Trump’s announcement on steel and aluminium tariffs weighed on investors.
The response to the decision was overwhelmingly negative in the European Union, China, Mexico, Canada and other key commercial allies of the United States. The EU promised to elaborate counter measures against some American companies like Harley Davidson or Levi’s.
If the mentioned countries start developing countermeasures, a trade war would be officially on and that is what currently worries market participants. Trump took the debate to another level saying trade wars are not necessarily bad, especially if you win them.
No relevant data is scheduled on Tuesday.