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Newly-stabilised DAX waits on new economic data

Germany’s DAX market index has stabilised after the last twenty-four hours saw incremental gains. As of writing, it now stands at 15,249.38.

Germany’s DAX market index has stabilised after the last twenty-four hours saw incremental gains. As of writing, it now stands at 15,249.38.

The DAX has had a tumultuous six months with huge falls, followed by recoveries, in mid-July and mid-September. Yesterday morning, it dropped to 15,121.25, before rising in the afternoon to 15,301.00. This week’s performance was better than last week’s, which saw huge fluctuations. Even so, the morning’s moderate-if-not-good news is likely to be tempered by the afternoon’s. Handelsblatt has foreshadowed new economic data due to be released today that could impinge on the DAX’s current condition.

The German paper wrote: “Over the course of the day, new economic data will come into focus. China’s consumer price index (CPI) rose 0.7% year-on-year in September. Analysts had expected an increase of 0.9%. On the other hand, the producer price index (PPI), which is regarded as a leading indicator of the development of inflation, rose by 10.7% in China in September compared to the same month last year – the fastest since data collection began in October 1996.”

Joint forecast

It added: “In the morning, the leading economic research institutes in Germany will present their new, joint economic forecast. This is likely to imply lower growth.” As reported on multiple outlets, these institutes seem likely to predict the German economy will not grow by 3.7% in 2021, as had been expected. Growth, instead, will hover around 2.4%.

As Reuters wrote yesterday afternoon: “The five institutes – the RWI in Essen, the DIW in Berlin, the Ifo in Munich, the IfW in Kiel and Halle’s IWH – are due to release their joint forecast amid a series of indicators suggesting that German growth prospects are flagging.”

However, the news agency did remain relatively upbeat, suggesting the news was not as catastrophic as it might sound. “On the plus side, the institutes will also raise their forecast for growth next year to 4.8% from 3.9% – suggesting activity is being delayed rather than lost altogether – and will project 1.9% economic growth for 2023,” Reuters added.

As Expert Investor has written elsewhere, there is a real fear the German car manufacturers are undergoing a crisis worse than that of 2008. A dearth in the supply of computer chips used in the manufacturer of automobiles has begun to sound alarm bells around the country, with reports that Opel, Volkswagen and Skoda are reining in production.

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