Market starts with a slight upward trend prior to the Federal Reserve's decision
The Frankfurt Stock Exchange commenced trading on Wednesday with a minor uptick, as the market awaits the Federal Reserve's latest interest rate decision later in the day.
A photograph of the bustling exchange, taken by the dts News Agency, was released, capturing the day's trading activities. The image was disseminated across various media platforms, offering a glimpse of the day's proceedings.
While market observers do not anticipate a new rate hike from the Federal Reserve, recent labor market data and increased economic uncertainty have heightened the likelihood of a rate cut by September 2025, according to reports. The central bank's future monetary policy is being closely watched in the Fed's announcement.
The current market expectations suggest that the Fed may keep interest rates steady in the near term but could potentially cut rates starting in September 2025. The Fed held the benchmark rate at 4.25% to 4.5% in late July 2025, signaling a pause after prior rate cuts earlier in the year, while inflation remains elevated and unemployment remains low.
In terms of the impact on selected German stocks, a Fed rate cut could potentially strengthen the euro, making exports more expensive for export-heavy German companies. However, it could boost consumer spending domestically. Lower U.S. interest rates generally increase global liquidity and risk appetite, benefiting growth-oriented stocks like Delivery Hero, SAP (technology and software), and MTU (aerospace engine manufacturer).
More stable or increased capital flow could also support financial stocks such as Allianz. However, it may pressure industrial and chemical firms like Deutsche Post (logistics) and Covestro (chemicals) if demand expectations adjust.
As of approximately 09:30 AM, the DAX was calculated at approximately 13,235 points, with Deutsche Post, Delivery Hero, and SAP emerging as the top gainers. The euro was little changed on Wednesday morning, trading at 1.1848 US dollars (-0.01 percent).
As the day progresses, the focus remains on the Fed's announcement and its potential impact on global markets and German equities. Elevated inflation in conjunction with slower global growth creates a mixed backdrop for sectors sensitive to economic cycles.
Other industries, such as aerospace and technology, might benefit from a potential Fed rate cut in September 2025, given the likelihood of increased global liquidity and risk appetite, boosting growth-oriented stocks like Delivery Hero, SAP, and MTU. Simultaneously, it could put pressure on the finance sector and industrial firms, with potential risks for financial stocks like Allianz and industrial and chemical firms like Deutsche Post and Covestro, if demand expectations adjust.
