US economic data eased interest rate concerns on Thursday, bringing gains to the German stock market. New growth figures showed that the US economy lost more momentum in the first quarter than previously thought. In addition, weekly initial jobless claims rose slightly more than expected. This news fueled expectations of interest rate cuts, which had recently been somewhat weakened.
Currently, the markets have only fully priced in one interest rate cut in the US by the end of the year – whereas at the beginning of the year there were up to six reductions. The central bank is hesitant because of the stubborn inflation, which has only fallen slowly recently.
A significant drop in the heavily weighted software shares of SAP prevented higher gains for the German leading index, the DAX, which closed 0.13 percent higher at 18,497 points. The stock market barometer is still some way off its record high of just under 18,900 points in mid-May – and thus also off the round mark of 19,000 points.
The MDax index of medium-sized companies gained 0.81 percent to 26,805 points on Corpus Christi, recovering somewhat from its slide the day before. On Wednesday, the slight increase in inflation in Germany in May caused frustration.
Salesforce’s outlook is suffering due to weak demand in the cloud business. This alarmed SAP investors because the cloud business is also becoming increasingly important for the German software group. Analysts at the Swiss bank UBS wrote that the malaise is comprehensive and not just Salesforce-specific. SAP shares lost more than four percent.
Shares in the pharmaceutical and specialty chemicals group Merck KGaA fell by a good two percent. Traders cited a lowered sales forecast from US competitor Agilent Technologies as a burden.
Among the best values in the DAX were car stocks. The shares of the supplier Continental and those of the sports car manufacturer Porsche AG each gained around two percent. The shares of the pharmaceutical and agrochemical group Bayer were at the top of the leading index, with a plus of 4.2 percent.
Traton shares gained 3.7 percent in the small-cap index SDax following a buy recommendation from the analysis firm Pareto.
The Eurozone’s leading index, the EuroStoxx 50, rose by 0.38 percent to 4,982 points. The leading indices in Paris and London rose even more significantly. In New York, however, the Dow Jones Industrial was down 0.9 percent at the end of European trading.
The euro benefited from the weak US data and was last quoted at 1.0839 dollars. The European Central Bank had previously set the reference rate at 1.0815 (Wednesday: 1.0857) dollars. The dollar thus cost 0.9246 (0.9210) euros.
On the bond market, the yield on bonds rose from 2.67 percent the day before to 2.72 percent. The Rex bond index fell by 0.21 percent to 123.43 points. The Bund future gained 0.22 percent to 129.21 points.
Source: Stern
