The stock market Hopes of inflation are fueling Europe’s stock markets

Frankfurt, 04 Jan – Hopes of a further slowdown in inflation put Europe’s investors in a buying mood mid-week. The Dax rose 1.3 percent to 14,363 points on Wednesday morning. It is a good sign that the leading German index was able to surpass the 14,200 points at the very beginning of the year, said Jochen Stanzl, market analyst at CMC Markets. “This gives rise to hope that the next round of 15,000 will be tackled soon.” Most of the other exchanges in Europe also rose for the third day in a row: the EuroStoxx50 rose by 1.5 percent to 3941 Counter.

For the German and at the same time European economy, there are increasing signs that the inflation peak is over. Following the recent significant fall in inflation in Germany, consumer price pressures also eased more than expected in France. Prices for imports to Germany have become cheaper than ever. According to stockbrokers, weaker inflation may mean that the European Central Bank can slow down its rate hikes.

“We’ve been in the trading year for a day and a half, so we can’t read too much into it, but the latest Eurozone inflation numbers are falling faster than expected,” said TraderX market analyst Michael Brown. In December, the ECB hinted that it could quickly raise interest rates by another 150 basis points. Recent data cast doubt on that, Brown said. “That’s the big story that markets are clinging to.” The dollar underperformed against the euroEUR= in the currency markets in light of this. The common currency rose 0.6 percent to $1.0610.


The minutes from the Fed’s December meeting, to be published the same evening, were also in the spotlight. At the end of the year, the central bank emphasized that the interest rate may have to remain higher for a longer time in the fight against inflation. Investors will analyze the minutes to see if further monetary policy tightening is likely. Wall Street closed in the red on Tuesday. “The market has started the year quite tentatively…(and) is still struggling to imagine what we’re going to see from the Fed this year,” said investment expert Rob Carnell of ING. The key interest rate is currently in the range of 4.25 to 4.50 percent after the latest increase of 0.50 percentage points. In their projections, the US monetary authorities estimate an average level of 5.1 percent for the end of 2023.

The mood in commodity markets remained gloomy. “Warning signs of a global recession, China’s weak recovery with rising Covid-19 cases, renewed strength in the US dollar and muted risk sentiment are all triggers that kept oil prices trapped overnight,” said Yeap Jun Rong, market analyst at IG. North Sea crude Brent and U.S. crude WTI extended their losses on Tuesday and were more than two percent lower at $88.32 and $75.30 a barrel. barrel (159 litres).


On the German stock market, Grenke stood out with an emotional rollercoaster ride. With new leasing business of around 2.3 billion euros for the full year 2022, Grenke ended up at the upper end of the forecast of 2.1 to 2.3 billion euros, which was only raised in October, initially pushing the shares up to 7 .4 percent to 23 euros. However, investors took profits, pushing the price down by around four percent.

Shares in the electricity group BKW plunged towards a 14-year high after an increase in earnings expectations. Shares in the Swiss company rose 5.4 percent to 135 francs.

Hopes of inflation are fueling Europe’s equity markets

Source: Reuters

Symbolic photo: Image from StockSnap on Pixabay

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