Germany’s DAX index rallied with other European blue-chip indices on Friday, adding 1.15% at closing, as the recent slowdown in US consumer price growth fueled optimism for monetary policy easing in the world’s top economy.
The US annual inflation rate came in at 3% in June, compared with 3.3% in the previous month and the consensus estimate of 3.1%. Core inflation rate edged down to 3.3% from 3.4% a month before.
“While the timing of eventual Fed rate cuts will depend on incoming data, this report, together with some softening in the labor market, has further tilted the balance of evidence towards an earlier start time,” commented Macquarie. “Consequently, we pull forward our baseline case for FOMC easing. We now see a first 25 bps cut in September (prev. December) and expect a total of 50 bps of cuts in 2024 (prev. 25 bps),” analysts added.
Speaking of rate cuts, Deutsche Bank Research expects the European Central Bank to cut rates two more times in 2024, one in September and another in December. “The ECB is not on a pre-determined path. We expect the ECB to avoid explicit guidance again in July. The underlying direction of travel should nevertheless be clear. As inflation converges towards target, the restrictive monetary policy stance will unwind further. However, the ECB does not want to commit to when and how much it will cut. It wants to be led by the data.”
Back at home, the German export sector remained in expansion territory in June, though growth slowed down due to challenging conditions in the European market. The HCOB Germany Manufacturing PMI Export Conditions Index declined to a four-month low of 50.8 from 51.9 the month before.
Meanwhile, results of ifo Institute surveys found that more companies in Germany are having difficulty securing loans, with the problem more pronounced in the construction and manufacturing industries. The ifo Credit Constraint Indicator came in at 27.1% in June, compared with 25.2% in March.
On the corporate front, SNP SHF shares surged 1.83% amid chatter of the software company considering a potential sale as it attracts acquisition interests. SNP did not immediately respond to requests for comment from MT Newswires.
Copper recycler Aurubis 
NDA concluded the planned maintenance shutdown of its plant in Hamburg, Germany, with the 95 million-euro initiative the largest ever in the company’s history. The stock was down 0.06% at closing.
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