German equities began the week sharply lower, reflecting investor concerns over China's deflationary issues while local industrial figures remained positive. The blue-chip DAX index closed down 1.69% on Monday, indicative of the broader European market trends. In China, consumer prices dipped 0.7% year over year in February, a drop that contrasted with the consensus estimate of a 0.5% decrease and the previous 0.5% increase in prices.
Analysts from HSBC expressed that the weak year-over-year growth highlights the necessity for additional support to bolster consumer confidence. In contrast, Germany's industrial production showed robust growth, jumping 2% in January after a prior month's decline of 1.5%. This growth not only exceeded the expected 1.5% increase but also highlights a potential turnaround in the manufacturing sector, despite an annual decrease of 1.6% in the index. The eurozone's largest economy reported a trade surplus of 16 billion euros in January, falling short of the previous 20.7 billion euros and also below market expectations of 21 billion euros.
Notably, Germany's monthly exports decreased by 2.5%, while imports showed a modest rise of 1.2%. According to ING, the latest data confirms a potential bottoming out of Germany's industrial slump. They indicated that while it's premature to call for a substantial recovery, if the proposed fiscal stimulus is implemented, it might provide a short-term boost in confidence and improve the long-term outlook for the German economy. In corporate news, BofA Global Research affirmed its buy rating on Zalando, assigning a price target of 40 euros.
The firm anticipates that the German fashion retailer will achieve mid- to high-single-digit growth by 2025, leveraging its online footprint in Europe and expanding its offerings in beauty and sportswear. Despite these positive projections, Zalando's stock closed down 3.96%. Additionally, Delivery Hero announced an acquisition through its foodpanda division, acquiring specific assets from Deliveroo in Hong Kong.
This news also contributed to a decline, with shares closing 3.16% lower for the session..