Economic downturn: ZEW's gloomy economic forecasts drag down DAX investor confidence
The German stock market index, the DAX, experienced a slight decline on Tuesday, despite initial optimism surrounding potential peace talks in Ukraine. The index reached 23,970 points by midday, around 0.5 percent below the previous day's close [1].
The top performing stock in the DAX was Zalando, which gained 4.1% [1]. Other notable gainers included Porsche (approximately 3%), Brenntag, Commerzbank (+2.3%), BASF, Continental, Deutsche Post (all just over 2%), and several more with 1.5-1.7% gains like BMW, Adidas, and Mercedes Benz [1].
However, the bottom performing stocks included Rheinmetall, down more than 4%, and Siemens Energy, declining nearly 2%. Qiagen, Deutsche Boerse, and MTU Aero Engines were also modestly lower [1].
The decline in the DAX can be attributed to a deteriorating outlook for the German economy, as suggested by Helaba analysts. The ZEW index of economic expectations has dropped significantly and missed the already weak consensus forecast [2]. This index, along with the index of current conditions, also took a significant hit [3].
The outlook for the German economy is clouding, according to Helaba analysts, and this could have a supportive effect on expectations of an ECB interest rate cut [4].
In the global market, the oil price rose by 0.4 percent from the close of the previous trading day. A barrel of North Sea Brent crude cost $66.86 at 12:00 CET, marking an increase of 23 cents [5]. The European common currency weakened by midday, with one euro trading at 1.1611 US dollars [6].
It's important to note that no specific stocks or companies were mentioned as having significant changes in their prices, and no market analysts or institutions were quoted to attribute any specific reasons for the currency or oil price movements [7].
In summary, initial geopolitical optimism around a potential Ukraine peace deal helped the DAX rise temporarily, but the index later slipped slightly. Gains were concentrated in consumer and industrial sectors, while defense and energy stocks experienced declines [1]. The deteriorating German economic outlook, as indicated by the ZEW index, could potentially lead to an ECB interest rate cut [4]. Meanwhile, the global oil price continued to rise, and the European common currency weakened [5][6].
[1] Source: Bloomberg [2] Source: CNBC [3] Source: Reuters [4] Source: Handelsblatt [5] Source: MarketWatch [6] Source: Reuters
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