Germany's DAX index declined 1.35% at Thursday's close as investors evaluate recent monetary policy moves by major economies ahead of the holiday season. The Bank of England decided to keep its bank rate unchanged at 4.75%, and the Bank of Japan maintained its short-term rate at 0.25%. In contrast, the US Federal Reserve reduced its federal funds rate by 25 basis points to a new range of 4.25% to 4.5%.
"As had been widely expected, the BoE's MPC today left Bank Rate on hold at 4.75%, still just 50bps below its summer peak. However, the vote on the Committee was tighter than many observers had anticipated, with three members (Deputy Governor Ramsden and external members Dhingra and Taylor) favoring a cut of 25bps to 4.50%," Daiwa noted.
"Our baseline forecast continues to envision a total of four such cuts next year and further easing in 2026. Should economic output continue to stagnate or worsen, we would not rule out more than four cuts in 2025." Domestically, GfK reported that consumer sentiment experienced a slight rebound toward the end of 2024, driven by improved income expectations and a willingness to purchase.
Consequently, Germany's consumer climate indicator is projected to rise by 1.8 points to -21.3 in January 2025, exceeding the consensus estimate of -22.5 points. "A sustained recovery in consumer sentiment is not yet in sight, as consumer uncertainty remains too elevated. High food and energy prices continue to be the main reason for this uncertainty," commented Rolf Bürkl, a consumer expert at the Nuremberg Institute for Market Decisions.
He added, "Concerns about job security are growing in various sectors." In corporate developments, Volkswagen ($VOW) is nearing an agreement with labor leaders to restore job security provisions and prevent factory closures in return for workers waiving their bonuses, as reported by Bloomberg News. The fifth round of negotiations commenced on Monday, with the German automaker's shares declining by 1.11%.
In a notable acquisition, XRG, previously known as Adnoc International, secured a 91.32% stake in Covestro ($1COV) through its public takeover offer for the German polymer materials manufacturer. In October, XRG had committed to acquiring Covestro at a price of 62 euros per share, totaling around 1.17 billion euros.
Covestro’s shares increased by 0.49% at the close..