German shares saw a positive finish on the first trading day of the week, buoyed by the news of the eurozone's private sector economy experiencing its first contraction in seven months. This downturn raises expectations for another potential cut in interest rates by the European Central Bank (ECB) in October.
As the trading session concluded on Monday, the DAX index, representing blue-chip stocks, noted a gain of 0.58%, indicating a rebound from losses incurred during the preceding trading day. The recent flash HCOB PMI survey, compiled by S&P Global, highlights a contraction in business activity within the eurozone’s private sector for September.
This decline is attributed to the continued fall in new orders, leading to the HCOB Flash Eurozone Composite PMI Output Index dropping to an eight-month low of 48.9, down from 51 in the prior month. Further analysis reveals that conditions within the manufacturing sector deteriorated dramatically in September, with the PMI declining to a nine-month low of 44.8 from 45.8 in August.
Simultaneously, the services sector's business activity is teetering on the edge of contraction, reflected in a fall to a seven-month low of 50.5 from 52.9. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, noted, 'The ECB is intently monitoring the persistently high inflation within the services sector.
The deceleration in both input and output price inflation comes as welcome news. Coupled with the ongoing recession within manufacturing and the stagnation in services, there is a credible possibility of another rate cut being considered in October, despite the fact that the market does not yet fully anticipate this outcome.' Focusing specifically on Germany, the private sector's economic conditions weakened further in September.
The HCOB Flash Composite PMI Output Index fell to a seven-month low of 47.2 compared to 48.4 in the previous month. Within the manufacturing domain, the PMI plummeted to a twelve-month low of 40.3 from 42.4. In the services sector, business activity experienced a decline as well, reaching a six-month low of 50.6 in September, down from 51.2 in August.
Turning to the corporate landscape, Deutsche Börse's German derivatives exchange Eurex has broadened its trading and clearing offerings for Credit Index Futures. This expansion includes new launches on the Bloomberg US Corporate Index and the Bloomberg US High Yield Very Liquid Index, resulting in a closing gain of 1.06% for the German exchange operator..