The prospect of interest rate cuts by the European Central Bank (ECB) has driven the DAX to new heights, with the German benchmark index breaking its May record and approaching 19,000 points.
On Thursday, August 29, the DAX soared to an all-time high of 18,936.04 points, up by 0.8 percent. The EuroStoxx50 also rose by one percent, reaching a six-week high of 4961 points. The anticipation of further rate cuts by the ECB in September has fueled the stock market rally. Investors are optimistic about better financing conditions, as the ECB had already lowered rates in June from a peak of 4.50 percent to 4.25 percent.
The declining inflation in Germany is likely to support the ECB’s actions. After a rise in July, the inflation rate in August dropped significantly due to lower energy prices. This has also put pressure on the euro, which fell by 0.4 percent to a low of 1.1071 dollars.
US rate cut expected in September – Gold prices rise
Investors are also looking forward to the release of the US Core Personal Consumption Expenditures (PCE) index on Friday, which could provide insights into the Federal Reserve’s interest rate outlook. A positive inflation report could strengthen the case for a rate cut in September, boosting gold prices, which are favored by low interest rates. Gold recently increased by 0.6 percent to $2516 per ounce. The expectations of a US rate cut have been reinforced by Federal Reserve Chairman Jerome Powell’s recent comments at Jackson Hole.
Nvidia disappointment shrugged off by investors
Despite the initial disappointment over Nvidia’s earnings report, investors quickly turned their attention back to European technology stocks, pushing the sector index up by 1.8 percent. Although Nvidia, the world’s leading AI chip maker, fell short of market expectations, the enthusiasm for AI remains strong. Nvidia’s shares dropped nearly five percent in pre-market trading, but market strategist Jürgen Molnar noted that the overall positive sentiment towards AI remains intact.
European spirits manufacturers see gains
European spirits manufacturers breathed a sigh of relief as China decided not to impose additional anti-dumping measures on imports from the EU. This decision particularly benefited French brandy producers Remy Cointreau and Pernod Ricard, whose shares surged by 8.1 percent and around nine percent, respectively, on the Paris Stock Exchange. In Milan, Campari shares also rose by more than four percent.
German stocks on the rise
Among German stocks, Delivery Hero stood out, gaining more than six percent. The company’s plans for an IPO of its subsidiary Talabat in Dubai were well received by investors. Schott Pharma shares skyrocketed by over thirteen percent after the pharmaceutical packaging company raised its growth target following strong quarterly results. Rival Gerresheimer also benefited, with its shares climbing 7.4 percent.
