The German DAX index registered a minor gain to conclude the week, closing at 24,240 points – a 0.1% increase from the previous day’s close. While initial optimism fueled by surprisingly positive US inflation data briefly lifted market sentiment, that enthusiasm proved short-lived, according to Christine Romar, Head of Europe at CMC Markets. The US inflation figures, revealing a 3% rise in both core and overall inflation for September – lower than anticipated – had already priced in expectations of multiple Federal Reserve interest rate cuts due to the delayed release of the data caused by the government shutdown. Consequently, the positive surprise impact was limited.
Despite the muted reaction, Romar suggested that if Wall Street maintains its current performance, the DAX could gather renewed momentum next week, potentially pushing towards a new all-time high. The prospect hinges on investor sentiment and a belief that the seasonally weaker market months have been weathered successfully, paving the way for a robust year-end rally.
However, significant headwinds loom. A packed earnings calendar next week, headlined by reports from tech giants Microsoft, Meta, Alphabet, Apple and Amazon, threatens to introduce considerable volatility. These companies’ performance and forward-looking statements have a disproportionate influence on the broader market. Following a week of mixed results from Netflix, Tesla and SAP – deemed unsatisfactory for investors accustomed to consistent success – a degree of caution and restraint is expected in the early part of next week. The underwhelming showings from these established players underscore a growing anxiety amongst investors, demonstrating a demand for stronger and more consistent performance.
Siemens Energy led the DAX in terms of price gains throughout the trading day, followed by Heidelberg Materials, Siemens and Commerzbank. SAP shares were at the bottom of the rankings, illustrating the varying performance across the index.
Meanwhile, European gas prices experienced a decline, trading at €32 per megawatt-hour for delivery in November – a 2% decrease from the previous day. This translates to a potential consumer price of at least 8-9 cents per kilowatt-hour if this level is sustained. In contrast, oil prices edged upwards, with Brent North Sea crude reaching $66.62 a barrel, representing a $0.63 (1%) increase.
The euro strengthened slightly against the dollar, trading at $1.1633, indicating a dollar exchange rate of €0.8596. This fluctuation in currency value highlights the complex interplay of global economic factors influencing investor sentiment and market stability.