Trump-Putin meetings loom amid economic uncertainty, with U.S. inflation figures also on the horizon
The German stock market index, the DAX, experienced a gain on Wednesday, primarily due to upbeat German manufacturing data and sector strength, especially in defense stocks.
According to market analyst Andreas Lipkow, the German HCOB Manufacturing PMI rose to a 38-month high of 49.9 in August, signaling modest growth and resilience in Germany's economy despite headwinds such as U.S. tariffs and geopolitical uncertainty. This positive data increased investor confidence, lifting the index.
Additionally, anticipation of rising demand for military equipment pushed defense-related shares like Rheinmetall, MTU Aero, and Airbus higher, further supporting the DAX's gains.
By the close of Xetra trading, the DAX was calculated at 24,186 points, marking a 0.7 percent increase from the previous day's close. Shares of Bayer, Fresenius, and FMC were at the top of the price list in Frankfurt, while Siemens Energy shares were at the bottom.
The European common currency was stronger in the afternoon, with one euro costing $1.1716, and one dollar worth €0.8535.
However, the DAX was later capped by U.S. Federal Reserve policy uncertainty around Chair Powell’s speech. Market analysts, including Lipkow, noted that some key US inflation data is expected in the coming trading days, which will influence US interest rate policy.
Ahead of the meeting between US President Donald Trump and Russian President Vladimir Putin on Friday in Alaska, market participants were avoiding unnecessary risks. Lipkow mentioned that there has been some persistence in US price developments recently, which could potentially be exacerbated by tariffs.
The price of a megawatt hour (MWh) of gas for delivery in September increased by 1 percent, now costing 33 euros. Meanwhile, the oil price for a barrel of North Sea Brent crude fell significantly, now costing $65.36, down $0.76 or 1.2 percent from the close of the previous trading day.
The consumer price of electricity, assuming the gas price level remains at this point, could be around 8 to 10 cents per kilowatt hour (kWh) including ancillary costs and taxes.
In summary, the main factors influencing the DAX's increase on that Wednesday were better-than-expected German manufacturing PMI data showing economic expansion, sector strength in defense stocks due to expected higher military demand, and overall investor optimism on Germany’s economic resilience despite geopolitical and trade challenges.
Finance experts, such as Andreas Lipkow, attribute the DAX's increase on Wednesday to several factors, including positive German manufacturing PMI data, robust growth in the defense sector due to anticipated military equipment demand, and overall optimism about the resilience of Germany's economy in the face of geopolitical and trade challenges. Furthermore, the rise in the DAX was also influenced by general news regarding the stronger European common currency and the uncertain U.S. Federal Reserve policy.
