German shares continued their downward trajectory for the second consecutive day this week, with the DAX index closing down 0.30%. This dip coincides with a noticeable slump in sentiment among local companies, reaching the lowest level since May 2020. In December, the ifo Business Climate Index saw a decrease to 84.7 points from 85.6 points in November.
This drop is primarily attributed to a rise in pessimistic expectations, despite some improvements in the current situations reported by businesses. Sector-wise, the ifo Institute identified declines across manufacturing, service, and trade indices, while construction exhibited some gains. Conversely, the ZEW indicator of economic sentiment for Germany experienced a modest uptick of 8.3 points, reaching 15.7 points in December.
However, the current conditions index slightly fell by 1.7 points, marking -93.1 points. Achim Wambach, President of ZEW, commented on the situation: "With snap elections ahead in Germany and the resulting expectations of an economic policy encouraging private investment as well as the prospect of further interest rate cuts, the economic outlook is improving.
Our daily analyses also indicate that following the meeting of the European Central Bank's Governing Council on December 12, experts still anticipate further interest rate reductions in the upcoming year." Looking at the broader eurozone picture, the ZEW economic sentiment indicator rose 4.5 points to 17 points, while the current situation index fell sharply by 11.2 points to -55 points. On the corporate landscape, German electrolyzer company thyssenkrupp nucera reported a substantial year-over-year increase in net results and sales during its fiscal fourth quarter.
This strong performance led a research boutique to upgrade its price target for the company. "We remain confident in the company's long-term prospects, supported by the expected overall growth in the hydrogen market and its robust market position. We reiterate our BUY rating and increase our price target to EUR 14.50, up from EUR 13.50, due to positive adjustments based on better-than-expected EBIT for FY23/24 and enhanced margin expectations for the coming years," noted mwb research.
Following this news, thyssenkrupp nucera's shares surged by 16.31% at market close. In contrast, Merck KGaA experienced a decline of 0.46% after announcing an agreement to acquire HUB Organoids Holding, a Netherlands-based company specializing in adult stem cell-derived organoids, for an undisclosed sum.
This acquisition is anticipated to finalize by the end of December..