In Germany prices are rising as sharply as they were in 1993. This is not entirely unexpected, but it does not help the stock market either. The DAX is still lacking momentum. the afternoon, the DAX continued to move within a narrow range between 15,856 and 15,896 points and thus barely moved compared to the closing level on Friday. The index is thus continuing its impulsive sideways trend from the previous week. Even a US Federal Reserve (Fed) , which will remain expansive for the time being, and American stock exchanges in a record mood has recently not helped the German stock market to attack its record high of 16,030 points, which it had struggled to achieve in August.
Inflation as high as 1993
And in view of the significant increase in inflationary dynamics in August, there is currently not much per centest that things could get better. As in the USA, this development does not come as a complete surprise due to a number of special effects, but it certainly cannot be used to justify fresh purchase arguments at a high level. In concrete terms, inflation in Germany has climbed to its highest level in almost 28 years. Goods and almost everything average 3.9 percent more expensive in August than in the same month last year, as the Federal Statistical Office announced in its first estimate. The last time there was a stronger rise in prices was in the period after German reunification – in December 1993, when it was 4.3 percent. Economists had expected a figure of 3.9 percent, after an inflation rate of 3.8 percent in July.”German inflation continues to follow its upward path, which is largely predetermined for the coming months due to base effects and other special corona-related factors and should peak in the autumn to values well over four percent,” commented Elmar Völker from der LBBW.After that, according to the official interpretation of the ECB (and also the Fed), this temporary phenomenon will recede again. On the stock market, however, there is still a queasy feeling in an inflation scenario, because this development is not set in stone either. Nasdaq continues on record course everything that the DAX lacks can be found on the New York world’s leading exchange. The Fed’s standstill continues to drive the markets; the Nasdaq technology exchange and the Nasdaq 100 selection index continue with new highs at the opening. The S&P 500 index also marks a record high at 4521eurozoneo far. Only the leading index Dow Jones is having a harder time and is slightly in the red.
Adtran’s shares lose nearly ten percent in New York. The US group wants to take over the German telecom equipment supplier Adva Optical, whose share jumps up significantly manager’s. In the intended transaction, Adva is valued at almost 760 million euros, as the companies announced. The takeover is to take place via a share swap, with Adva shareholders receiving 0.8244 shares of the merged com, in particular,) for each security. The Adtran shares would be exchanged for shares in the new holding company on a one-for-one basis.
Important economic data are pending
One reason for the reluctance in this country is likely to be related to important economic data that are due in the coming days. The market strategists at Credit Suisse speak of a “week of macro data”: After the German inflation data, consumer prices in the eurozone will be published on Tuesday, while data on current consumer confidence will come from the USA. Finally, the US labor market report for August will follow on Friday.
Also in the opinion of Ulrich Kater, chief economist at Dekabank, this week is tough, because on Tuesday there will also be the purchasing manager’s index in China: According to Kater, the indicator should show the current burdens resulting from the continued Chinese no-covid strategy. Should China’s economy lose momentum, negative effects on Germany’s economy, in particular, are certain.
The euro is struggling with the $ 1.18 markThe dollar traded slightly below the $ 1.18 mark in the afternoon. Since Jerome Powell’s speech, the greenback has been under slight pressure against other currencies, as the US Federal Reserve chief did not announce a precise schedule for “tapering”, ie reducing bond purchases, at the Jackson Hole conference. In return, the euro climbed temporarily above the $ 1.18 mark. The higher inflation data from Germany (and previously from Spain) have little impact on trade as they were expected. The foreign exchange market is also looking excitedly at the numerous new economic data over the course of the week.