The German stock index, the Dax, ended the week with a decline. At the close of trading on Xetra, the index was recorded at 25,569 points, marking a 0.8 percent drop compared to the previous day’s closing level. Although the Dax started the day favorably, it continued to rise until midday before stabilizing near the achieved level amidst ongoing volatility.
Andreas Lipkow, Chief Market Analyst at CMC Markets, noted that relief was palpable in the financial markets due to the US consumer price data failing to present any major surprises. He pointed out that only the core inflation rate in August slightly exceeded expectations, rising by 0.3 percent month-over-month instead of the projected 0.2 percent. Following the US Wall Street’s firm opening, the Dax was also able to establish itself above the 25,500-point threshold in the afternoon. Lipkow concluded by stating that investor focus is now shifting to the upcoming Fed meeting next Wednesday.
Simultaneously, energy prices remained the dominant topic in global finance. The analyst explained that supply chain disruptions in Saudi Arabia, resulting from attacks by Houthi rebels, have driven up the cost of various oil types in recent days. This has subsequently fueled inflation concerns and heightened investor fears of a stagflation scenario across Europe and the United States.
Lipkow described the central banks as being in a difficult position, necessitating extreme caution. They face a major dilemma: either combat rising prices through tight monetary policies, thereby risking the crippling of economic growth, or maintain a loose interest rate policy to boost economic expansion, accepting the increased risk of further price hikes. He emphasized that this is no simple situation, a tension reflected on the bond markets through rising yields and falling bond prices. He predicted that the coming week, with three central bank meetings scheduled, would bring considerable momentum and keep both markets and investors highly engaged.
Among major stocks, Infineon, Siemens, Deutsche Telekom, and Siemens Energy led the performance lists nearing the end of trading. In contrast, Rheinmetall and BASF registered the weakest showings.
Market movements also saw a drop in energy commodities. The price for a Megawatt-hour (MWh) of gas for October delivery fell to 80 euros, representing a three percent decrease from the previous day. If this level holds consistently, it implies a consumer price of at least around 13 to 15 cents per kilowatt-hour (kWh), including taxes and ancillary costs.
Similarly, the price of oil decreased. On Thursday afternoon, around 5 PM German time, a barrel of North Sea Brent crude traded at $104.30 USD, which was 331 cents, or 3.1 percent, less than the close of the previous trading day.
Finally, the European common currency weakened slightly on Thursday afternoon. The euro traded at $1.1605 USD, meaning the dollar fetched 0.8617 euros.
