German equities have seen a downturn, closing in the red for the fourth consecutive trading day, primarily influenced by the contraction of business activity across the eurozone. On Thursday, the well-regarded DAX index concluded its trading session 0.78% lower. This decline follows a sustained period of economic challenges within the euro area, which officially entered contraction territory in September.
The latest data reveals a notable decrease in the HCOB Eurozone Composite PMI Output Index, which dropped to a seven-month low of 49.6 from 51 the previous month. Similarly, the HCOB Eurozone Services PMI Business Activity Index also fell to a seven-month low of 51.4 in September, down from 52.9 in August. S&P Global, responsible for compiling these pivotal PMI survey results, has highlighted that the three largest economies within the bloc exhibited simultaneous contractions in their private sector during the reviewed month.
Specifically, in Germany—an economist's focal point—the HCOB Composite PMI Output Index experienced a further decline, slipping to a seven-month low of 47.5 in September, a drop from 48.4 in August. This slump is indicative of a sluggish expansion within the services sector, which has now reached a six-month low. The confidence index within the sector reflects this troubling trend, as indicated by insights from Hamburg Commercial Bank Chief Economist Cyrus de la Rubia.
"Confidence in the sector has taken a hit too. Some of the surveyed businesses are worried about a recession and a deeper slump in manufacturing. And they are not wrong to be concerned. Our GDP estimates, which factor in the HCOB PMI, suggest that the economy shrank again in the third quarter after contracting in the second, and the momentum is downwards," he commented, underscoring the precarious situation of the German economy. On the corporate front, significant developments have emerged regarding SAP's involvement in alleged collusion with product seller Carahsoft Technology.
Reports indicate that prosecutors in the US are "dramatically expanding" their investigation into the matter. The scrutiny pertains to accusations of price manipulation involving SAP products sold to various US government agencies, as detailed in a court document referenced by Bloomberg News. The US Justice Department has issued requests for documents and information from Carahsoft regarding 94 government agencies that procured products from the German software giant.
A representative from SAP has confirmed to Bloomberg that both the company and its US-based subsidiary have been complying with the Justice Department's document requests, initially made in August 2022. As a consequence of the ongoing investigation, SAP's stock reflected a loss of 1.45% upon market closing, illustrating the ripple effects of legal challenges on corporate performance..