The Dow Is Soaring. Germany’s Dax Is Soaring Even More.

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Illustration by Michael George Haddad

8:46 a.m. The Dow Jones Industrial Average looks set for a big jump at the open thanks to optimism around U.S.-China trade talks. But its gains pale in comparison to Germany’s Dax.

That makes sense. As important as China is for the U.S., the U.S. is still big enough, and consumer focused enough, to weather the standoff, as it has done for much of the past year and a half. Not so a country like Germany, which depends on China for its exports and may already have slipped into recession.

Which explains why the Dax has gotten a big pop Friday morning. Its climbed 2%, helping to life the Stoxx Europe 600, which has climbed 1.6%. Dow futures has risen 271 points, or 1%. A trade deal, then, should continue to be a big boon for Germany’s stock market, but disappointment could hit it even harder.

And it doesn’t have to be the mother of all trade deals. The market appears ready to accept a whole lot less, explains The Mitchell Market Report’s Martin Mitchell. “What markets most want to hear is that the tariff increase set to go into effect on Oct 15 will be suspended,” he writes. “It would also be helpful if some of the other tit-for-tat threats (travel/visa restrictions, blacklist additions, investment restrictions, retaliation threats) are walked back as well.”

U.S. President Donald Trump and Chinese Vice Premier Liu He are set to meet at 2:45 p.m. today.

Markets Now is a quick take on what’s happening with the Dow Jones Industrial Average and other major market indexes. Don’t forget to check out the rest of Barron’s markets coverage.

Write to Ben Levisohn at Ben.Levisohn@barrons.com