For the second consecutive trading day, German stocks closed in negative territory on Wednesday as the latest data showed that Europe's top economy is caught in stagnation and that inflation bounced back. At closing, the DAX index lost 1.13%, joining a regional retreat of European blue-chip indices. Germany's Federal Statistical Office indicated the country's quarterly gross domestic product is expected to have risen 0.2% in the third quarter, beating expectations of a 0.1% decline.
Amid the surprise expansion, Destatis also revised the GDP data for the second quarter to a 0.3% contraction from its previous estimate of a 0.1% decrease. "All in all, today's GDP data brings welcome relief to the battered German soul. However, it doesn't take away the fact that the economy remains stuck in stagnation.
At least it is not falling into a severe recession. It's the small things that matter these days," commented ING. The Dutch lender added that the latest PMI data and ifo index for Germany indicate that Europe's top economy "can at least avoid a severe recession." Meanwhile, flash data from Federal Statistical Office data showed that the annual inflation rate edged up to 2% in October from 1.6% in September.
Analysts expected a 1.8% rate for the month. In the wider eurozone, the economy also surprised in the third quarter, with Eurostat's preliminary flash estimate showing that the bloc's GDP rose 0.4% quarter over quarter, compared with the previous and expected growth of 0.2%. On the corporate front, Volkswagen ($VOW) emerged as the top gainer among German blue-chip companies, adding 1.10% at closing, after it reported third-quarter results in line with its profit warning in September.
The German automaker also affirmed its guidance for full-year 2024 amid lower attributable earnings and sales revenue in the three months ended Sept. 30. Meanwhile, BASF ($BAS) closed 1.68% in the red on the back of its third-quarter results. The German chemicals company reported a return to income for the three-month period though sales were unchanged year over year amid weak automotive demand, negative currency effects and lower prices..