The blue-chip DAX index concluded February with no significant change as market analysts closely monitor the latest inflation data from key eurozone economies in anticipation of the European Central Bank's (ECB) rate decision upcoming next week. Destatis reports that Germany's annual inflation rate has remained steady at 2.3% for the second consecutive month in February, aligning perfectly with the consensus estimate.
On a monthly basis, consumer prices in Germany, Europe's largest economy, experienced a slight uptick of 0.4%, a rebound from the previous month's decline of 0.2%. In Italy, inflation inched up to 1.7% year over year from a prior 1.5%, meeting market expectations. Conversely, France has observed a reduction in its annual inflation rate, which eased to 0.8% from the previous 1.7%, although this was against an expected rate of 1%.
Financial analysts at ING offer insights on the situation, indicating that today's inflation figures, particularly from Germany, France, and Italy, solidify the argument for a potential 25 basis point rate decrease by the ECB next week. They stress, however, that the prevailing question remains the future direction of the ECB.
"The critical communication to anticipate next week involves whether the ECB will remove the 'restrictive' terminology from its official stance. Given the current heightened level of uncertainty, fully abandoning this label may appear overly aggressive," ING noted. Aside from the upcoming ECB meeting scheduled for March 6, investors are keenly awaiting the finalized PMI readings for February as well as the eurozone's preliminary inflation data for the same month, slated for release on March 3.
In the corporate landscape, Allianz announced an increase in both year-over-year net income and total business volume for 2024, accompanied by the launch of a new €2 billion share buyback program. For the year 2025, Allianz projects an operating profit of €16 billion, with a margin of plus or minus €1 billion.
As of closing, the German insurer saw a decrease of 0.90%. In a commentary from Deutsche Bank, they highlighted that while Allianz has reported strong results in Q4 2024, there are nuances within the earnings mix that need to be addressed, especially given that their 2025 guidance midpoint falls below market consensus.
Historically, Allianz tends to achieve results towards the upper end of their guidance range as the year progresses, thus maintaining a degree of investor confidence. The shares have performed robustly leading into these latest figures, but may experience some turbulence based on the forward guidance release..