The German DAX index opened marginally unchanged Thursday morning, trading around 23,960 points, mirroring the previous day’s close. Initial trading saw Zalando, Heidelberg Materials and Airbus leading the gains, while Merck, Commerzbank and Bayer lagged behind. This follows a concerning pattern: the index has struggled to maintain a foothold above the psychologically significant 24,000-point threshold, having breached it for eight consecutive days prior to this recent dip.
According to Thomas Altmann of QC Partners, this movement directly reflects a waning risk appetite on Wall Street. “We are currently witnessing profit-taking” Altmann stated, highlighting a broader trend among investors aiming to secure year-end gains. While 2024 is expected to be recorded as a strong year for the DAX, the distribution of performance remains uneven. Despite the overall success, only 24 out of 44 companies that were, at some point, part of the index contributed positively to the year’s gains, while 18 actively detracted. This disparity suggests potential vulnerabilities and a lack of broad-based strength within the German market.
The focus now shifts to the release of US inflation data for November, a potentially pivotal event that could significantly influence market sentiment. Expectations are for an increase in the annual rate from September’s 3.0% to 3.1%, further distancing it from the Federal Reserve’s target of 2%. This persistent inflation is likely fueling debate regarding the timing and magnitude of future interest rate adjustments, a core factor influencing investment decisions.
Further complicating the landscape, the European Central Bank is scheduled to announce its latest interest rate decision later in the day. The euro currently trades somewhat weaker at $1.1736, a reflection of broader economic uncertainties impacting the currency.
The rising price of Brent crude oil, currently priced at $60.09 a barrel, adding 41 cents or 0.7% from the previous day’s close, introduces another layer of complexity. While relatively modest, the increase may be indicative of ongoing geopolitical tensions and supply chain vulnerabilities, potentially contributing to inflationary pressures across the Eurozone. Investors are carefully assessing whether this costlier energy environment will further constrain economic growth and impact corporate profitability in the coming months.