German shares faced a setback on Tuesday, with the DAX index dropping 2.13% by the end of the trading day, following an unexpected decline in the economic sentiment indicator for the country. The ZEW economic sentiment indicator fell to 7.4 points in November from 13.1 points in October, falling short of the anticipated 13 points.
Additionally, the current situation index dipped further into negative territory at -91.4 points compared to -86.9 points, against the consensus estimate of -85.9 points. "Economic expectations for Germany have been overshadowed by Trump's victory and the collapse of the German government coalition.
In the current survey, economic sentiment has declined - and the outcome of the US presidential election is likely to be the main reason for this," stated ZEW President Achim Wambach. "Still, more optimistic voices were heard in the last survey days, expecting economic prospects for Germany to improve with snap elections on the horizon." In local economic news, Germany's annual inflation rate was confirmed at 2% in October, up from the previous rate of 1.6%.
The harmonized rate also increased to 2.4% from 1.8%. Destatis attributed this uptick in inflation to rising food prices and the current above-average increase in the price of services. The DAX was significantly impacted by Bayer, which saw its shares plummet 14.93% following its third-quarter update.
Reports indicate that the stock is at its lowest level in two decades as investor sentiment reacts to the company's disappointing outlook. Conversely, Infineon Technologies experienced a rise of 3.66% despite reporting an annual decline in its attributable profit and revenue for the year ended Sept.
30, 2024, amid decreasing demand in its end markets. The German semiconductor manufacturer anticipates a slight year-over-year revenue decrease for fiscal 2025. Additionally, Lufthansa confirmed that it has submitted a remedy package to address the European Commission's concerns regarding its acquisition of a 41% stake in Italy's ITA Airways.
A spokesperson for the German airline expressed confidence that the EU Commission will approve the remedy package in the coming weeks. The stock closed lower at 1.29%..