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Auto stocks also struggled amid trade uncertainties. Volkswagen dropped 0.93%, with BMW, Mercedes-Benz Group, and Porsche also posting early losses.
German Private Sector PMIs in Focus
In the morning session, Germany’s private sector PMIs will influence ECB rate cut bets and equity market sentiment. Economists forecast the HCOB Manufacturing PMI to rise from 48.4 in April to 48.9 in May, and expect the Services PMI to increase from 49. To 49.5.
Upbeat PMI surveys, including higher employment and rising prices, may temper ECB rate cut expectations, pressuring rate-sensitive DAX stocks. Conversely, softer PMIs, falling employment, and easing prices could fuel ECB rate cut bets. A more dovish ECB rate path may increase demand for risk assets.
While Ifo Business Climate data will also draw interest, these will likely play second fiddle to the PMI reports.
ECB Monetary Policy Meeting Minutes
Markets will scrutinize the ECB’s latest policy meeting minutes for signals on the future rate path. Rising support among policymakers for further rate cuts could drive the DAX higher. On the flip side, calls for caution against further rate cuts to assess trade developments may weigh on risk sentiment.
Wall Street Sell-Off Deepens Global Jitters
US equities tumbled on Wednesday, May 21, as investors reacted to a weak 20-year Treasury auction. Weak demand for US Treasuries fueled fiscal concerns and sent yields higher. The Dow slid 1.91%, while the Nasdaq Composite Index and S&P 500 dropped 1.41% and 1.61%, respectively.
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