German stocks ended the first trading day of the week in decline, as the country's private sector activity inched up to a two-month high but continued to reflect contraction. The DAX index reported a drop of 0.45% by the end of Monday. Recent data from S&P Global and Hamburg Commercial Bank revealed that the composite PMI increased to 47.8 in December from November's 47.2, marking the sixth consecutive month of contraction in business activity.
Analysts had anticipated a reading of 47.5. The private sector's struggles in Germany were predominantly influenced by the manufacturing sector, which remained entrenched in recession as the PMI fell to a three-month low of 42.5 from 43. Conversely, the services sector exhibited a slight rebound, jumping to a two-month high of 51 from 49.3, which helped ease the rate of contraction in overall business activity. "It is still a bit unclear whether the services sector is in a slow-motion downturn or on the brink of stabilization leading to recovery," remarked Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.
"We are inclined to expect a recovery in the German services sector, buoyed by improved sentiment over future activity and the upcoming snap elections in February, which should bring more political clarity." Across the broader eurozone, the contraction in private sector activity showed signs of easing, with the composite PMI rising to a two-month high of 49.5 from 48.3, surpassing the consensus estimate of 48.2.
The services PMI also reached its highest level in two months at 51.4, up from the previous reading of 49.5, while the manufacturing PMI remained unchanged at 45.2. In corporate developments, Allianz scrapped its pre-conditional voluntary cash general offer to acquire at least 51% of Singapore’s Income Insurance Ltd.
due to concerns raised by the Singaporean government regarding the current deal terms and amendments to the country's Insurance Act. In July, the German insurer had proposed to invest SG$2.2 billion for the stake. Allianz's shares fell by 0.89% at the close..