German equities flashed green on Monday, recovering from the previous week's losses, as upbeat corporate earnings and trading updates bolster investor sentiment ahead of key economic data reports. Tracking its European peers, the blue-chip DAX index was 1.21% higher at closing. Continental AG was the top gainer during the session, adding 10.81% after posting a year-over-year increase in its third-quarter net income despite weak automotive production. Hannover Re also gained 3.31% as it upgraded its 2024 profit target following its improved nine-month results.
The German reinsurer is now targeting a full-year profit of 2.3 billion euros, up from the previous forecast of at least 2.1 billion euros. For 2025, Hannover Re intends to achieve a group net income of 2.4 billion euros. "The FY24 earnings target has been upgraded to meet consensus at (Euro)2.3bn, while the newly disclosed FY25 target is a touch lighter although this is typically conservatively set as seen in prior years," RBC Capital Markets said in a note. On the economic front, the final inflation print for October is due for release tomorrow, alongside the ZEW economic sentiment index for November.
Capping off the week on Friday are wholesale price figures for October. Markets are also watching the latest political developments in Germany, with reports of a no-confidence vote in December 2024 and a snap election by February 2025. "It seems a leap of faith at this stage to expect a complete turnaround in the German fiscal position and instead the onus will be on the European Central Bank to support the eurozone economy," ING commented.
Analysts at the Dutch bank expect the ECB to cut rates by 50 basis points in December..