FRANKFURT (dpa-AFX) - US customs policy is likely to continue to preoccupy investors in the new week. The issue continues to cause uncertainty. Just a few days ago, an international trade court in New York declared almost all of the tariffs imposed by US President Donald Trump under an emergency law to be illegal. However, an appeals court immediately reinstated the measures – for the time being. Investors are now reacting to the tariff confusion with relative calm. The price swings are much more moderate than those seen after the first serious tariff shock at the beginning of April.
Nevertheless, the uncertainty surrounding the US government's tariff policy is weighing on economic growth in large parts of the world, wrote Ulrich Kater, chief economist at DekaBank. However, the economic weakness is at least having a calming effect on inflation. According to Kater, the recently published data on German consumer prices in May confirmed that inflation in Germany is now back within the European Central Bank's (ECB) target range.
The ECB is aiming for a medium-term inflation target of 2 percent. Inflation in the eurozone stood at 2.2 percent in April. Investors will find out what the figure for May is on Tuesday. The figures are unlikely to have any impact on the ECB's key interest rate decision on Thursday. Market participants firmly believe that the central bank will cut its key interest rate by a further 0.25 percentage points.
Inflationary pressure in the eurozone is easing faster than expected, explained ING Bank's chief economist Carsten Brzeski, pointing to the stronger euro and lower oil prices as a result of the erratic economic policy of the US.
With further key interest rate cuts and economic indicators brightening, the fundamental environment is improving, wrote the experts at Commerzbank. However, following the strong gains of recent weeks, they now expect the stock markets to take a breather at a high level.
The DAX and MDAX have already gained a good fifth since the beginning of the year. German small and medium-sized enterprises are considered to be the beneficiaries of the new government's billion-euro investments in Germany, which is why the MDAX recently caught up with the DAX and reached its highest level in over three years. In the DAX, the recent record high of 24,326 points remains the benchmark for the time being.
The new week also marks the start of June on the stock markets. "This is not one of the best months for the stock market," said analyst Christian Henke from broker IG. However, such past patterns should be treated with caution. May, for example, which usually has a reputation as a bad month for the stock market, was very positive for local investors, despite the tariff zigzags. The tariff policy and the dispute between US President Trump and Fed Chairman Jerome Powell were just a few of the disruptive factors in May, but they did not harm the markets too much, Henke commented.
Before the stock market week comes to an end, another important economic indicator is on the agenda this Friday with the US labor market figures for May. Commerzbank forecasts that the data will remain robust for the time being. However, the tariff storm is likely to weigh more heavily on the US labor market in the summer, as higher prices will weaken demand and some companies are likely to respond with job cuts, it added. /ajx/ag/jha/
--- By Achim Jüngling, dpa-AFX ---
