The Dax opened the trading day on Thursday with slight gains. By 9:30 am, the leading index was calculated at around 20,609 points, a 0.2% increase compared to the previous day’s close.
Zalando’s shares led the stock market, driven by the company’s recent financial reports. Vonovia’s papers, on the other hand, lagged at the bottom of the list in Frankfurt.
“After good inflation data from the US, the hope of a rate cut has returned to the stock market” commented Jochen Stanzl, chief market analyst at CMC Markets. “The slowdown in inflation is showing up where it hurts the most – in core inflation. Exactly what the optimists on Wall Street had hoped for” he explained. “The decline is a relief, even if the rate is still significantly above the US Federal Reserve’s target of 2%.”
Several rate cuts by the Fed had already been ruled out before the data was published, Stanzl said. “The Fed had already signaled in December that it would be cautious in 2025. The inflation data now confirms this stance: given a stable labor market, caution is still warranted” he said. “At least the only rate cut expected for this year is not off the table after the data.”
However, investors should still prepare for a scenario in which interest rates remain high for a longer period, the analyst advised. “The Fed will not be swayed by a single month of better data. It looks at trends, treating individual data points as secondary, as they could be outliers” Stanzl said. “The inflation data may only slightly erode the conviction of higher rates for a longer period, but not overturn it.”
Meanwhile, the European single currency was slightly weaker on Thursday morning, with one euro costing 1.0289 US dollars and one dollar worth 0.9719 euros.
Oil prices also fell slightly, with a barrel of North Sea Brent crude costing around 81.87 US dollars at 9 am German time, a 16-cent or 0.2% decrease from the previous day’s close.