The Dax index closed the week on a downward note, after a quiet and uneventful trading session that turned sharply negative in the final minutes. The index was calculated at 21,787 points at the Xetra closing, a 0.5 percent decline from the previous day’s close. Earlier in the morning, the index had reached a new all-time high of 21,945 points.
The sudden and sharp decline in the index was attributed to rumors that US President Donald Trump plans to impose new tariffs on goods from the EU. The US markets also opened lower in response to the news.
Friday’s labor market data from the US also generated a lot of discussion among investors, who were looking for clues on the future of the US Federal Reserve’s monetary policy. According to the data, the US labor market outside of the agricultural sector created 143,000 new jobs in January, with the unemployment rate falling to 4.0 percent from 4.1 percent.
“While the labor market presents itself as robust, the consequences of this good data should not be automatically positive for the US economy in the long run” commented Thomas Gitzel of VP Bank on the data. The better the US economy is doing, the longer the Fed may keep interest rates at a high level and the more likely it is that the Fed will tighten monetary policy again in the future, he said. “The next interest rate step could even go in the opposite direction, up rather than down. While this scenario is still purely theoretical, the longer the US economy runs smoothly, the more it gains relevance in practice.”
The European common currency was slightly weaker on Friday evening, with one euro costing $1.0343 and one dollar being worth $0.9668 in euros.