German equities experienced gains on Thursday following the European Central Bank's significant monetary decision. The blue-chip DAX index closed 0.13% higher at the conclusion of a dynamic trading session. The ECB decided to lower rates by 25 basis points, bringing the deposit facility rate down to 3%.
The central bank emphasized that the ongoing disinflation process remains 'well on track' and reaffirmed its dedication to a data-driven approach for decision-making. Mark Wall, Deutsche Bank Chief European Economist, stated, 'More importantly, the door has been opened more clearly to further cuts. The ECB continued to describe current financing conditions as tight but dropped the reference to needing to keep policy sufficiently restrictive for as long as necessary.' According to Wall, this combination indicates an easing bias.
He added, 'For a market that has been pricing the chances of a sub-neutral terminal rate in 2025, today's ECB decision will feel like an endorsement.' Regarding inflation matters, tomorrow's economic data calendar includes the final consumer price growth figures for November from France and Spain, while Germany is set to unveil its latest trade report and wholesale price index.
On the corporate front, Siemens ($SIE) closed 0.78% lower after its smart infrastructure unit revealed its financial targets for the medium term. The unit aims to achieve a comparable revenue growth of 6% to 9% over the cycle, aligning with global megatrends. Furthermore, AlphaValue/Baader Europe upgraded MTU Aero Engines ($MTX) from reduce to add and increased the price target from 358 euros to 369 euros, resulting in a 0.77% rise in shares.
Analysts noted that 'MTU's strengths in spare parts, leased engines, and the military market remain key competitive advantages. This optimism is further supported by the robust 2025 outlook shared at the recent Capital Markets update, underscoring the company's ability to deliver solid performances across its core segments.'.