German stock index, the DAX, experienced a downturn midday Monday, continuing a trend established earlier in the trading day. Around 12:30 PM local time, the index was calculated at approximately 24,300 points, representing a decrease of 0.3 percent compared to the previous day’s close. Leading the decliners were Rheinmetall, Commerzbank and Deutsche Bank, while Siemens Energy, RWE and Zalando lagged behind.
The Ifo business climate index for August, released Monday morning, provided limited market impetus. While the index registered its sixth consecutive increase, economist Thomas Gitzel of VP Bank Group noted that the pace of growth remains slow and the index remains at relatively low levels. “This reflects the state of the German economy: there is no significant recovery in sight. In fact, GDP contracted by 0.3 percent in the second quarter” he stated.
A positive note was struck by the improved outlook reported by companies despite ongoing trade disputes. The subindex for expectations rose from 90.8 to 91.6, indicating a degree of resilience. Coupled with a continued, moderate recovery in purchasing managers’ indices, hopes persist for a slight economic revival.
Gitzel anticipates that interest rate cuts by the European Central Bank and planned multi-billion euro infrastructure spending by the German government will act as key drivers of any potential upturn. However, increased US tariffs are simultaneously acting as a drag on growth. “The slow pace of improvement in the Ifo business climate index mirrors the situation in the German economy” he commented.
In currency markets, the Euro weakened midday Monday, trading at 1.1692 US dollars, while the dollar was valued at 0.8553 Euros.
Oil prices also rose, with a barrel of Brent crude trading at 68.16 US dollars around 12:00 PM Central European Time, a gain of 43 cents or 0.6 percent compared to the previous day’s close.