German equities experienced a downturn on Monday, with the blue-chip DAX index closing down by 0.56%. This decline reflects the ongoing manufacturing downturn affecting Germany and the broader eurozone, despite some minor signs of recovery. Recent results from the S&P Global-compiled HCOB PMI survey indicated that Germany's manufacturing sector remains in contraction for October, with the final headline HCOB Germany Manufacturing PMI recorded at 43.
This reading marks a three-month high for the index, up from 40.6 in September and the flash estimate of 42.6. "The monetary policy environment could be a small ray of hope for the manufacturing industry. The ECB cut interest rates again in October and is planning a further reduction in December. The Fed opted for a reduction of 50 basis points in September.
HCOB Economics expects one further interest rate cut in the eurozone and two in the US in 2024. These measures could ease financing pressure and support demand in the export-oriented German industrial sector," remarked Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank. However, Feldhusen further noted that as long as structural problems persist in Germany, the outlook remains bleak.
Companies continue to grapple with uncertainty concerning investments, elevated energy costs, robust competition, and weak demand from China. In the wider eurozone, the manufacturing slump also showed signs of easing in October, with the HCOB Eurozone Manufacturing PMI registering a five-month high of 46, compared to 45 in the previous month.
The preliminary reading stood at 45.9. On the corporate front, Siemens ($SIE) has entered into a collaboration with the Abu Dhabi-based information technology and services company Etimad's Emirates Smart Solutions subsidiary to upgrade the Esna Barrage and Lock located in Luxor, Egypt. As part of the agreement, the German technology group will be responsible for supplying, installing, and operating a supervisory control and data acquisition system to manage the movement of the barrage’s gates.
At the market close, Siemens recorded a loss of 0.12%..