The DAX registered gains on Thursday, concluding trading at 25,383 points, a 0.3% increase compared to the previous day’s close. Despite starting the day with a weak performance, the index managed to turn positive by the end of the session.
Amid global market activity, the focus remains heavily on inflation in the United States. According to Andreas Lipkow, Chief Market Analyst at CMC Markets, US producer prices are likely to deliver the “next inflation shock” to investors. With producer prices climbing 1.3% over the last month and 6.3% year-on-year, the upward price pressure is significantly stronger than previously feared. Coupled with the already surprisingly high consumer prices reported the day before, these indicators strongly suggest that inflation is gaining momentum in the US.
Lipkow cautioned that a major complicating factor is that corporations have not yet fully been able to pass on increased energy and transport costs to their customers. He explained that some of the inflationary pressure could therefore take months to reach consumers. The current surge in producer prices, he noted, could foreshadow further challenging surprises in CPI, thereby intensifying the pressure on the Federal Reserve to continue hardening its restrictive monetary policy.
Against this inflationary backdrop, the US economic performance continues to appear surprisingly robust. The analyst noted that retail sales increased by 0.8%, significantly surpassing expectations, and the Empire-State Index stood at 25.5 points. Initial unemployment claims were within the expected range at 198,500, though the Philadelphia Fed Index offered a disappointing reading of 20.9 points. While the US economy currently withstands headwinds, this strength simultaneously grants the central bank the necessary room to tighten policy decisively against inflation.
Within the DAX, technology stocks such as Infineon and Siemens Energy faced selling pressure. Nevertheless, investors have been capitalizing on this stock weakness to make targeted purchases in defensive industries. Lipkow stated that while the general willingness to remain invested in equities is evident, overall risk appetite is notably declining, marking the beginning of what could become a challenging autumn for the stock market. Leading the list of gainers in Frankfurt were Scout 24, Rheinmetall, and Zalando, while Siemens Energy, Hochtief, and Infineon appeared at the bottom.
In other markets, the price of natural gas fell, with a megawatt-hour (MWh) for November delivery costing 87 euros, a one percent decrease from the previous day. Should this price level hold, the implied consumer cost would be at least 13 to 16 cents per kilowatt-hour (kWh), including ancillary costs and taxes. Conversely, the price of oil rose; a barrel of North Sea Brent crude reached $106.30 on Thursday afternoon, reflecting an increase of 23 cents or 0.2% session-over-session.
The European common currency also strengthened on Thursday afternoon, with the euro trading at $1.1205 against the US dollar, meaning the dollar fetched 0.8925 euros.
