On Thursday, Germany's DAX index experienced a negligible shift, closing slightly down by 0.08%. This modest decline comes as recent economic data unveils a less-than-encouraging landscape for the German economy. A notable highlight, however, was the performance of Deutsche Bank, which surged by 3.23% by the close of trading.
This increase followed a settlement agreement reached between the German financial giant and Effecten-Spiegel, a local investment firm. The settlement pertains to the litigation surrounding Deutsche Bank's acquisition of Postbank. As part of the agreement, Deutsche Bank has committed to pay Effecten-Spiegel an additional amount of 36.50 euros for each Postbank share, facilitating the resolution of the lawsuit initiated in the Higher Regional Court of Cologne. In context to the broader economic panorama, the recent findings compiled by S&P Global from the latest HCOB PMI survey indicate that Germany's construction sector is grappling with a more pronounced decline as of August.
The Total Activity Index has dropped to 38.9, a decrease from the prior month's figure of 40. S&P Global has attributed this ongoing downturn to insufficient demand within the sector. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented on the current climate, stating, "Although the European Central Bank's (ECB) recent easing of monetary policy may have briefly sparked some faint hopes for a turnaround in the housing market, those feelings are dissipating quickly.
After a brief halt in the decline, we are witnessing the housing sector descend at its most rapid pace in four months. The outlook isn't significantly more promising for the commercial real estate market, either, as the index has plummeted to a seven-month low. The ECB's cautious stance regarding rate cuts - with a second anticipated cut on September 12th - appears to be insufficient in alleviating the ongoing pressures faced by builders." Recent reports from the ifo Institute portray a stark picture, indicating that the German economy remains ensnared in a crisis and is likely heading toward stagnation in 2024.
Analysts attribute this somber forecast to both economic challenges and structural deficiencies. Nonetheless, some positivity is projected for the upcoming two years, with economic output expected to rise by 0.9% and 1.5%, respectively. Across the broader eurozone, the construction sector is faring no better than Germany's struggling economy.
August data reveals that activity continues to contract, with the HCOB Eurozone Construction PMI Total Activity Index remaining stable at 41.4, marking the 28th consecutive month of decline..