A cut in interest rates in the Eurozone did not cause any major waves on the German stock market on Thursday. The DAX merely gave up some of its gains when investors realized that the expected decision by the European Central Bank (ECB) could no longer drive the leading index. Investors also missed indications that there could be further easing in the near future.
The leading index Dax defended a gain of 0.41 percent to 18,652.67 points at the end, after having already gained more than one percent in the daily high before the interest rate decision. The leading index ran out of momentum a good 100 points before the record high of 18,892 points. The MDax also came back a little, closing 0.23 percent higher at 27,027.80 points.
Economist Carsten Brzeski of ING Bank noted that Lagarde did not provide any clear forecasts. “If the eurozone economy meets the ECB’s forecasts, there will be further rate cuts, but the risk of a delay or even a reversal is real,” he added. In this respect, today’s cut is not necessarily the start of an easing cycle.
While bank prices rose, a lack of information on future monetary policy had a negative impact on German real estate stocks. Vonovia fell by a good two percent in the DAX. In the MDAX, TAG Immobilien, LEG and Aroundtown were at the bottom with losses of between 3.1 and 6.4 percent.
The Dax increase is due in no small part to the 3.6 percent increase in SAP shares, which are a heavyweight and are moving toward their record high from March. At its annual customer fair, SAP exceeded market expectations with encouraging growth targets, wrote analyst Nay Soe Naing from Berenberg Bank.
Announced changes to the index composition were also discussed. In the leading index, the DAX, everything remains the same, but shares of Tui, Rational and Traton are moving up into the MDAX. However, this did not help the shares in most cases: Tui and Traton at least fell by up to 4.8 percent after several positive trading days.
On the other hand, Morphosys, SMA Solar and Sixt have to leave the MDax, having recorded share price losses. The rises and falls also lead to a reshuffle in the SDax. The focus there was on the addition of the Douglas perfumery chain, which returned to the stock exchange in March. Its share price rose by half a percent.
On the European stage, the EuroStoxx remained up 0.7 percent. The broad-based Stoxx Europe 600, which reached a record high, received more attention than the Eurozone’s leading index. In Paris and London, the country indices defended gains, and in New York they remained close to the previous day’s level.
On the foreign exchange market, the euro was only briefly affected by the ECB’s interest rate cut. After significant fluctuations, the common currency was last worth 1.0882 US dollars. The European Central Bank had previously set the reference rate at 1.0865 (Wednesday: 1.0872) dollars. The dollar thus cost 0.9203 euros.
On the bond market, the yield on outstanding bonds fell from 2.61 percent the day before to 2.59 percent. The Rex bond index rose by 0.09 percent to 124.19 points. The Bund future recently fell by 0.10 percent to 130.53 points.
Source: Stern
