The German DAX index maintained positive momentum on Tuesday, continuing its upward trend through the afternoon. Around 12:30 PM, the index was measured at approximately 24,555 points, marking a gain of 0.6 percent compared to the previous trading session. Leading the list of top performers were RWE, Merck, and Allianz, with Beiersdorf, MTU, and Airbus also featuring prominently.
This followed a report from the Center for European Economic Research (ZEW) detailing a further dip in the medium-term economic forecasts provided by financial analysts and institutional investors. However, Thomas Gitzel, chief economist at VP Bank, noted that while a decline was anticipated, it still constitutes a surprise. He added that it is important to recall that significant drops in ZEW economic expectations following major shocks are not unusual. For instance, the Mannheim economic barometer fell by over 60 points after the announcement of reciprocal US tariffs last year, only to rise sharply shortly thereafter.
Gitzel cautioned that the conflict in the Persian Gulf and elevated oil prices will not pass unnoticed by the German economy. He explained that mounting energy costs negatively impact the disposable income of private households, thereby affecting private consumption. Furthermore, the industrial sector is directly and indirectly affected by higher energy costs. He concluded by noting that the extent of any slowdown in growth will depend crucially on how long oil prices remain at elevated levels.
Meanwhile, the Euro weakened at midday on Tuesday. One Euro cost $1.1759, while the US Dollar was trading at 0.8504 Euros. Oil prices also declined; the price for a barrel of North Sea Brent crude at noon German time was $94.75, which represented a decrease of 73 cents, or 0.8 percent, from the close of the previous trading day.