In recent trading days, investors on both sides of the Atlantic have had to deal with the smouldering trade dispute between the US and China and fears of a potential US banking crisis. Specifically, this relates to regional US financial institutions that have made problems with loans public. Investors were also confronted with the start of the US reporting season. Due to the ongoing partial shutdown of the US government, the economic data calendar was once again extremely poor.
DAX
Uncertainty due to regional US banks
The DAX already fell below the psychologically important 24,000-point mark on Friday. The trade dispute is hitting the real economy, while the crisis at smaller regional US banks is affecting confidence. Together, the two are acting like a toxic cocktail on the markets. If the situation at the regional banks worsens further or the trade conflict escalates, there is the threat of further trouble. Investors fear a déjà vu. A week ago, US President Donald Trump caught investors on the wrong foot.
No solution yet to the tariff dispute between Washington and Beijing
The trade dispute between the world's largest economies also threw a spanner in the works for investors this week. A week ago, the US president announced additional tariffs of 100% on Chinese imports, sending markets around the world into turmoil. The background to this was Beijing's announcement that it wanted to impose stricter controls on the export of rare earth technologies.
On Sunday, just two days later, he wrote on his online platform Truth Social. „Don't worry about China, everything will be fine. The highly respected President Xi has just had a bad moment,“ Trump said. Xi „does not want a depression“ for his country and neither does he himself, he added. Beijing, meanwhile, spoke of a so-called „double standard“.
ZEW weaker than expected - but slight improvement compared to the previous month
At 39.3 points, the ZEW index was weaker than expected in advance (40.5 points), although better than in the previous month (37.3 points). However, the assessment of the current economic situation continued to fall. At minus 80 points, the situation indicator for Germany was 3.6 points below the previous month's value.
Publication of US inflation data scheduled for next Friday
US inflation data should have been published on Wednesday, but was canceled due to the ongoing government shutdown in the US. This data is due to be published next Friday (24.10.2025).
„Beige Book“ produces no new findings - EU inflation picks up in September
Late on Wednesday evening, however, the Fed's economic report „Beige Book“ was published, which, on balance, did not provide any new insights. The US economy has hardly changed in recent weeks. According to the Fed, the labor market has been largely stable.
The EU inflation data published today is also likely to have provided food for thought. According to the statistics office Eurostat, inflation in the eurozone rose by 2.2% in September (compared to the same month last year), which is above the target of 2.0%.
Dow Jones Industrial Average Index
US banks provide interim support with strong figures
In the reporting season, both Morgan Stanley (ISIN: US6174464486) and Bank of America (ISIN: US0605051046) were able to report leaps in profits for the third quarter thanks to good business in investment banking. Morgan Stanley's net profit increased by around 45 percent to 4.6 percent. Bank of America reported a 23 percent increase in profit to 8.5 billion dollars.
Morgan Stanley
Bank of America
