The German blue-chip DAX index closed 0.34% higher on Wednesday after the latest US inflation figures met expectations, prompting investors to evaluate their potential impact on the Federal Reserve's upcoming rate decision. The US annual inflation rate increased to 2.7% in November, up from 2.6% in October, aligning with market consensus.
Furthermore, the core inflation rate remained unchanged at 3.3% for the third consecutive month. Experts from Deutsche Bank highlighted that "if inflation does make a comeback in 2025 and 2026, it may center around tax cuts and tariffs. Today's numbers are well before any of those occurrences, but US inflation has exhibited stubbornness in recent months, especially in what has been the better half of the year for seasonal trends." They noted that futures are currently pricing in an 86% probability that the Fed will decide to cut rates this week, though, prior to the November meeting, a reduction was considered a 95% chance, indicating increased uncertainty.
In Europe, all eyes are on the European Central Bank (ECB) as it prepares for its monetary policy announcement tomorrow. Analysts widely anticipate a 25-basis-point rate cut, which would reduce the deposit facility rate to 3%. In corporate developments, fashion retailer Zalando plans to make a takeover offer for fellow retail player About You at a price of 6.50 euros per share, leading to respective stock increases of 1.63% and 66.15% for the two companies.
FactSet data indicates that the overall transaction is valued at approximately $1.19 billion. Baader Helvea commented, "From a market perspective, this represents a bold consolidation step in the online fashion market in Europe. However, in the short-term, Zalando's profitability may take a hit, given that About You continues to operate at a loss." Meanwhile, Adidas' headquarters in Germany has been subject to a raid by authorities as part of a long-running tax investigation.
The sportswear firm has stated that it does not anticipate the inquiry to have a major financial repercussion. At market close, Adidas shares were up by 0.50%..