In a notable turn of events, German stocks concluded Thursday's trading session on a positive note, buoyed by expectations that the country's annual inflation rate will cool to below the 2% target for August. This optimism was reflected in the performance of the DAX index, which rose by 0.69%, joining a broader rally among European blue-chip indices and marking the third consecutive trading day in positive territory. Preliminary data released by Germany's Federal Statistical Office indicated that the annual inflation rate for August stands at 1.9%, a decrease from July’s 2.3% and below the consensus estimate of 2.1%.
Furthermore, Destatis predicts that core inflation in Germany, the largest economy in Europe, will ease to 2.8%, down from the previous month’s 2.9%. This trend is being interpreted as a sign that inflationary pressures are starting to stabilize, which could have positive implications for monetary policy decisions moving forward. Additionally, data from the European Commission revealed a mixed outlook for the eurozone.
The Economic Sentiment Indicator (ESI) improved to 96.6 in August, up from 96 in July, while the Employment Expectations Indicator also saw an increase, rising to 99.2 from 97.9. On a less optimistic note, the final Consumer Confidence Indicator for the eurozone declined to -13.5 in August from -13 in July, indicating a persistent lack of consumer confidence that remains below the long-term average.
Commenting on these developments, ING noted, "In general, the ESI seems in line with continued sluggish economic growth in the third quarter for the eurozone. Selling price expectations for goods and services are not showing significant movements right now, suggesting that core inflation is stabilizing just above 2.5% for the latter half of the year." This assessment underscores the cautious optimism currently surrounding the eurozone's economic recovery amidst ongoing global uncertainties. Meanwhile, across the Atlantic, the economic landscape in the United States reflects a more robust growth trajectory.
The latest reports from the Bureau of Economic Analysis showed that real gross domestic product (GDP) increased by 3% year over year in the second quarter, an upward revision from the advanced estimate of a 2.8% increase. This growth follows a 1.4% increase in the first quarter, indicating a potentially stronger rebound for the US economy in the wake of recent challenges. In the corporate sector, Bayer AG ($BAYN) has made headlines by initiating the phase 3 Soho-02 trial for its investigational agent, BAY 2927088, with the enrollment of the first patient.
This significant step forward in clinical research aims to evaluate the efficacy and safety of the investigational agent as a first-line therapy for patients suffering from advanced non-small cell lung cancer with HER2-activating mutations. Bayer’s stock reflected this positive momentum, closing up 0.72% on Xetra.
Overall, the stock market's reaction reflects a degree of confidence among investors as they closely monitor both domestic and international economic indicators..