German unemployment data for the month of May show a greater than expected decline in the number of unemployed people. The seasonally adjusted unemployment change number fell by a better than expected 6,000 in May, a fall of 5,000 had been estimated.
German GDP for the first quarter and inflation figures throughout the second quarter have all pointed toward a robust performance from the German economy. However, the uncertainty thrown up by the U.K.'s vote to leave the European Union now threatens to undermine the relative prosperity of the bloc's largest economy.
Developments in Brexit discussions will be a large influence over the German economy and stock markets during the months ahead, given the extensive trade links between the two nations. The U.K. is Germany's third largest export destination globally and Germany is the U.K.'s largest export market in the EU.
Should the U.K. enter into a recession in the short term, or find it is locked out of European Union export market in the long term, then the German economy and the nation's stock markets will not go unscathed.
In the wake of the British referendum, the euro came under immense pressure relative to all other major currencies, while the German DAX index was hit almost as hard as London's FTSE 100 on the morning of the announcement.
There remains at least a two year negotiating period ahead during which, the future relationship between the U.K. and the EU will be decided. Should investors lose faith in the ability of lawmakers to negotiate a solution that can work for all parties, then markets could come under pressure once again.
The Dax was recently down 0.23% at 6,590.58, after two days of gains. The euro was recently up 0.02% against the dollar at $1.1127.