It’s been a rocky five-session stretch for German equities.
Last Friday, German stocks had a particularly rough go of it after reports of possible automaker collusion conspired with (get it?) jitters about Berlin’s increasingly fraught relationship with Ankara and a stronger euro to weigh on risk sentiment.
Fast forward to this week and after a tentative start on Monday, things stabilized, helped by a ‘euphoric’ Ifo print.
Well, here we are on Thursday and the DAX is again underperforming the rest of Europe:
Not helping matters is Deutsche Bank, which is down sharply as folks are largely ignoring the pretax profit beat and focusing squarely on a FICC fumble (you’re seeing that a lot for obvious reasons), and disappointing revenue:
But don’t place the blame solely with Deutsche. Bayer isn’t helping either, falling sharply after Q2 revenue missed and management cut full-year guidance:
For an amusing juxtaposition, look no further than German August GfK Consumer Confidence which, at 10.8, beat expectations (10.6).
Meanwhile, income expectations were reported at 60.9, the highest since German reunification. Here’s GfK:
The bright economic outlook is also having a positive effect on income expectation. The income indicator was even able to surpass its record value from the previous month just barely. The indicator increased by 0.7 points, reaching a figure of 60.9 points. No better level has been recorded since reunification.
This income euphoria is based on the excellent state of the employment market in Germany, and remains so. According to the Federal Employment Agency, the figures for employment and employment subject to social insurance contributions are continuing to increase. Thus, the number of people employed is expected to increase again this year by more than half a million. Fewer than 2.5 million people are registered as unemployed at the moment. This is the lowest value since 1991.
So you know, look at the bright side.