Stock update on DAX: DAX advances following adjustment - Market focus on US monetary policy
Revamped Analysis:
Stock markets in Germany saw a boost on Thursday, with the German benchmark index climbing 0.8% to 13,737 points, and the EuroStoxx50 gaining 0.3%. However, these gains were dampened by doubts about the future monetary policy of the US Federal Reserve. The minutes of the Fed's latest meeting provided limited clarity on whether the central bank would opt for another large interest rate hike of 0.75 percentage points in September or stick with a 0.5 percentage point increase.
Investors bet on further strong interest rate hikes in the US, sending the dollar index to a three-week high of 106.95 points, up 0.4%. The minutes from the Fed meeting suggested that participants expected it might take longer than anticipated for the inflation problem to resolve. The Federal Reserve had previously raised the key interest rate by 0.75 percentage points in both July and June, setting the range between 2.25 and 2.50 percent.
Inflation concerns persist in the Eurozone, despite recession risks. Despite the outlook for inflation remaining unchanged since the July meeting, Isabel Schnabel, a member of the executive board of the European Central Bank, stated that a further interest rate hike for the Eurozone is unlikely to be delayed much longer. The inflation rate in the Eurozone skyrocketed to a record high of 8.9% in July, driven by soaring energy prices and price increases in food.
On the corporate front, many individual stocks recovered after the Dax plummeted by two percent in the middle of the week due to inflation and recession concerns. Highlights include Covestro and BASF each gaining around 2.5%, Shop Apotheke whose shares rose by up to 14.5%, and Austrian oilfield services provider Schoeller-Bleckmann (SBO), whose shares surged by 6.5%.
Behind the Scenes: Interest Rates and Inflation
U.S. Insights
While core inflation appears stable, there is apprehension that tariffs could push prices up and hinder economic growth in the short term. The US Federal Reserve remains focused on managing inflation to ensure it does not rise persistently. Economists anticipate a series of interest rate cuts later in 2025, with analysts suggesting up to five cuts could occur as the economy grapples with potential impacts from tariffs and growth concerns.
Eurozone Perspectives
In the Eurozone, the central bank faces challenges in balancing inflation and economic growth, often using interest rates and other tools to stabilize the economy. Currently, there's no specific information available on the Eurozone's outlook for interest rates and inflation. However, one would typically look at European Central Bank (ECB) statements and inflation data for a comprehensive understanding of the situation.
Essential Statistics
- U.S. Interest Rates: Pause expected due to tariff and economic uncertainties.
- U.S. Inflation: Tariffs could lead to increased inflation.
- Future U.S. Outlook: Potential for multiple rate cuts later in 2025.
- Eurozone: Data not available for comprehensive analysis. For the Eurozone, looking at ECB statements and inflation data can provide a deeper insight into the situation.
- Despite worries about tariffs potentially pushing prices up and hindering short-term economic growth, the US Federal Reserve continues to focus on managing inflation to prevent it from rising persistently, with analysts predicting a series of interest rate cuts later in 2025.
- In the Eurozone, the central bank faces the challenge of balancing inflation and economic growth, often using interest rates and other tools to stabilize the economy. However, specific information about the Eurozone's outlook for interest rates and inflation is not currently available.
- The German stock market saw a boost on Thursday, but gains were dampened by doubts about the future monetary policy of the US Federal Reserve, with investors betting on further strong interest rate hikes in the US.
- Inflation concerns persist in the Eurozone, despite recession risks, with the inflation rate in the Eurozone skyrocketing to a record high of 8.9% in July, driven by soaring energy prices and price increases in food.
- As the US Federal Reserve holds its interest rates steady due to tariff and economic uncertainties, the 0162 industry in Germany, specifically finance, business, and investing sectors, could be affected by any shifts in the global monetary policy landscape.
