The Dax index closed lower on Tuesday. At the Xetra close, the index was calculated at 20,246 points, a decline of 0.3% from the previous day’s close. The top of the stock list was held by Daimler Truck, Porsche Holding, and Siemens, while at the end of the trading day, Brenntag, Eon, and Sartorius were in the top positions.
“The Ifo Business Climate Index published today speaks a clear language: the German economy is in the midst of a crisis” said Konstantin Oldenburger, a market analyst at CMC Markets. The slightly improved assessment of the current situation is more of a cosmetic change, which can be attributed to the hope for a new government in Berlin.
“It’s not good for Europe. While France’s weight is already swaying, the Chancellor has presented the confidence vote and lost as expected” said Oldenburger. The hope is great that the upcoming federal election will produce a government that is capable of taking action in the economy, which can turn the mood in companies and give the economy a boost with the “necessary and long-overdue measures.”
However, the market is not really concerned with politics, according to the analyst. “The market is simply consolidating the gains of the past two weeks, so the current pause can be valued as a waiting period.” New dynamics might emerge on Thursday after the last Fed meeting of the year, with the market expecting a 25-basis-point interest rate cut, which would be the third cut of the year, bringing the total reduction to a percentage point.
Meanwhile, the market has revised its forecasts for next year, with the current predictions of three interest rate cuts, according to Oldenburger. This is significantly lower than the six to seven steps of 0.25 percentage points that were priced in at the end of the summer, when recession fears emerged.
The European common currency was slightly weaker on Tuesday afternoon, with one euro costing 1.0499 US dollars, and one dollar being worth 0.9525 euros.
In the meantime, the oil price fell significantly, with a barrel of the North Sea Brent crude oil costing around $72.80 at 5 pm German time, a decline of $1.11 or 1.5% from the previous day’s close.