The DAX continued to move in negative territory on Tuesday, following a somewhat weak start to the day. By approximately 12:30 PM, the index was calculated at around 25,385 points, reflecting a decline of 0.2 percent compared to the previous trading day. Companies leading the stock performance listed included Rheinmetall, MTU, and FMC, while the Deutsche Bank, Brenntag, and BASF were among the top earners.
Regarding the broader economic outlook, the Centre for European Economic Research (ZEW) previously indicated a slight increase in medium-term economic expectations among financial analysts and institutional investors. Thomas Gitzel, Chief Economist at VP Bank, stated that the prospects for the German economy remain stable in the view of the financial market analysts surveyed by the ZEW. He added that because many of the ZEW respondents likely submitted their opinions before the recent sharp rise in energy prices, the increased oil and gas costs are not yet fully reflected in the current survey.
Gitzel cautioned that growth in the third quarter is unlikely to build upon the performance of the two preceding quarters. He noted that while rising oil and gas prices pose an economic burden, low levels in important waterways are simultaneously interrupting supply chains.
Despite these challenges, the German economy possesses underlying momentum. He highlighted that increasing overseas demand for German products is strengthening industrial production, as export orders in the second quarter significantly surpassed those of the first three months of the year. Furthermore, Gitzel pointed out that higher defense and infrastructure spending from the federal government will have a positive impact in the second half of the year. This trend is evidenced by the recent noticeable increase in public sector orders in the main construction sector. Overall, despite all current adversities, the German economy is projected to achieve growth of approximately one percent this year.
On the currency front, the European community currency weakened somewhat around noon on Tuesday: one Euro cost $1.1538, meaning the dollar was purchased for 0.8667 Euros. Meanwhile, the oil price climbed, with a barrel of Brent crude from the North Sea costing $107.50 around noon German time, a 1.7 percent increase from the end of the previous trading day.
