German equities wrapped up a turbulent trading week negatively, with investor sentiment dampened by the Chinese government's recent efforts to invigorate the second-largest economy in the world. Mirroring the trend of its European counterparts, the blue-chip DAX index experienced a decline of 0.76% on Friday. In a week-long meeting, Chinese officials approved a substantial 10 trillion-yuan debt package designed to assist regional governments.
Finance Minister Lan Foan hinted at additional fiscal stimulus, yet refrained from sharing further details. Initial market reactions seem unfavorable. One potential outcome of a Trump victory concerning China could be its influence on stimulus responses, leading markets to anticipate a more generous stimulus package.
However, as we highlighted in our report earlier this week, more developments may occur as policymakers gain insights into the direction a new Trump administration might take next year, as stated by ING. Turning back to Europe, important data releases next week will include Germany's final inflation figures for October and updated information from ZEW's economic sentiment index.
Additionally, a second estimate for the eurozone's third-quarter gross domestic product growth is expected. In corporate developments, Berenberg has upheld its buy rating on Heidelberg Materials ($HEI.DE) while raising their price target from 120 euros to 138 euros, following the unveiling of the company’s third-quarter results.
The German building materials firm saw a closing increase of 1.44%. Analysts noted, “The company is showcasing profit momentum despite facing challenging end-markets, largely driven by pricing and operational efficiencies.” Furthermore, the announcement of a EUR500 million cost-saving initiative in Q3, which equates to 14% of the expected FY24 EBIT, suggests that management is aimed at pursuing further growth and operational efficiencies..