Dax Advances After Reset: Dax Gains Momentum with US Interest Rates in Focus
Bold Moves in the Stock Market and Central Bank Policies: An Uncertain Ride
On Thursday, the German benchmark index surged by 0.8 percent, climbing to 13,737 points, while the EuroStoxx50 gained a modest 0.3 percent. Yet, gains were curtailed by the lingering question of the US Federal Reserve's monetary policy course. The Federal Reserve's latest meeting minutes provided little clarity on their intentions for another major interest rate hike—either a 0.75 percentage point increase in September or a more modest half-point rise.
According to the minutes, the need for more interest rate hikes was acknowledged, but the pace might slow depending on economic development. With the dollar index reaching a three-week high of 106.95 points, investors prepared for further aggressive interest rate hikes in the US, strengthening the USD accordingly.
In the Eurozone, inflation remains a persistent concern, and the next interest rate hike seems imminent, despite looming recession risks. ECB member Isabel Schnabel remarked in an interview, "At the moment, I don't think that outlook has fundamentally changed." With July's inflation rate reaching a record high of 8.9 percent in the Eurozone, driven by soaring energy prices and food costs, the ECB's upcoming meeting on September 8 is of significant interest to investors.
On the corporate front, several individual stocks rebounded after a midweek drop caused by inflation and recession concerns. Notable gains were seen in Covestro, BASF, and Shop Apotheke. Schoeller-Bleckmann, an Austrian oilfield services provider, enjoyed a 6.5 percent surge thanks to increased profits in the first half of the year due to high demand from the oil and gas industry.
Current Outlook for Monetary Policy in the US and Eurozone
United States
As of May 2025, the Federal Reserve maintains a steady stance on interest rates, keeping the federal funds' target range at 4.25–4.50%. Despite inflation being slightly above the 2% target, the Fed chose to hold rates steady due to economic uncertainty and mixed inflation expectations. The labor market remains robust, with low unemployment, but concerns about potential increases in inflation and unemployment persist. Some experts expect cuts in interest rates later in 2025 if economic conditions improve.
Eurozone
The European Central Bank (ECB) typically responds to inflationary pressures by adjusting monetary policy. The ECB remains vigilant regarding inflation and will likely react to maintain economic stability. Global economic conditions and trade policies can influence ECB decisions.
Key Takeaways:- The US Federal Reserve intends to maintain a steady stance on interest rates, but investors anticipate further aggressive hikes.- In the Eurozone, inflation is a persistent concern, and the possibility of additional interest rate hikes seems imminent.- Global economic conditions and trade policies can impact central banks' monetary policy decisions.
The industry of finance in the United States is anticipating further aggressive interest rate hikes from the Federal Reserve, as they maintain a steady stance but the economic uncertainty and mixed inflation expectations persist.
In the Eurozone, the business sector is closely monitoring the European Central Bank's decisions, as inflation remains a persistent concern and the possibility of additional interest rate hikes seems imminent to maintain economic stability.
