German shares saw significant gains on Thursday as investors evaluated the latest inflation data to gauge potential shifts in the European Central Bank's monetary policy. Low trading volumes, a result of a US holiday, didn’t impede the blue-chip DAX index, which closed up 0.85%. Preliminary figures released by the Federal Statistical Office indicated that Germany's annual inflation rate rose to 2.2% in November, an increase from 2% in October, slightly below the consensus estimate of 2.3%.
Meanwhile, the harmonized inflation stood steady at 2.4%. "With headline inflation accelerating and economic sentiment stabilizing, opposition against a 50bp rate cut at the December meeting will grow stronger," remarked analysts at ING. "A 25bp rate cut decision would rather follow the cautious meeting-by-meeting approach, though running the risk of not yet getting ahead of the curve.
We will wait for tomorrow's eurozone inflation numbers to finally make up our minds." Expectations for the euro area's annual inflation rate are set to increase to 2.3% from 2%, with the core rate anticipated to rise to 2.8% from 2.7%. In corporate news, Heidelberg Materials ($HEI.DE) announced that its North American unit has agreed to acquire Giant Cement Holding Inc for $600 million, aimed at enhancing its footprint in the Southern US and New England markets.
The German construction materials giant finished the day up 1.15%. Symrise ($SY1) experienced a minor setback, falling 0.24% after Deutsche Bank reduced its price target from 130 euros to 125 euros, while maintaining a buy rating. The research firm expects the ingredients sector to achieve "another solid performance" in 2025.
Analysts commented, "Year-over-year comparisons may seem challenging, but much of this reflects the normalization of volumes following the de-stocking cycle in 2023. In essence, the trends that have fueled the sector's growth over the past decade continue unabated.".