On Wednesday, German shares experienced a substantial recovery following the announcement of a significant fiscal stimulus package aimed at revitalizing Europe's largest economy. The blue-chip DAX index surged 3.38% by closing, indicating a strong rebound from the losses observed the previous day. Leaders from Germany's CDU/CSU and SPD parties have come to a consensus on a new initiative that outlines a 500 billion-euro investment vehicle dedicated to infrastructure projects, alongside a reform of the debt brake that will facilitate an increase in defense spending.
This pivotal agreement aims to strengthen economic resilience and support sustained investment in critical sectors. "We will adjust our growth forecasts for the German economy once more clarity emerges in the upcoming days. It is evident at this point that there is a notable upside risk to our 1.0% growth projection for 2026," stated experts from Deutsche Bank.
They also cautioned, however, that the outlook for 2025 might be heavily influenced by global trade policies, which present ongoing risks that could see growth downgrades from their 0.5% forecast. In broader economic terms, Germany's private sector managed to remain in expansion territory during February, although the growth rate showed signs of deceleration compared to January.
The German composite PMI output index recorded a figure of 50.4, a slight decline from January's 50.5, falling short of the flash estimate of 51. In corporate developments, sportswear giant adidas ($ADS) announced its return to growth in 2024, reporting an impressive 11% increase in net sales year-over-year.
For 2025, the company anticipates that currency-neutral sales will grow at a robust high-single-digit rate, while the stock closed 0.13% higher on the Xetra exchange. Despite this positive outlook, RBC noted, "Adidas has presented another (very) conservative FY25E EBIT guidance that is approximately 20% below the market's expectations, which may exert short-term pressure on the shares.
Nonetheless, we anticipate that adidas will exceed both revenue and EBIT projections, owing to strong brand and product momentum, increased shelf space, consistent execution, and competitors that are still in transition mode.".