After the recent price slide, the leading German index started the trading day stable at 25,559 points.
Yesterday the DAX ended trading with a discount of 1.7 percent at 25,576 points. The reason was the renewed escalation in the Middle East. It drove the price of Brent oil above the psychologically important mark of $100 per barrel for the first time since mid-July.
Today is all about the interest rate decision by the European Central Bank (ECB). It will be announced in the early afternoon at 2:15 p.m. Inflation in the euro zone recently rose to 3.3 percent. The financial markets are therefore expecting the ECB to increase the key interest rate to 2.5 percent in order to curb inflation. “An interest rate increase of 25 basis points is fully priced into the market, anything else would be a big surprise,” comments Wolfgang Bauer, fund manager at Royal London Asset Management.
As usual, the subsequent press conference will be of particular interest. Investors are hoping for clues about the ECB's future monetary policy: "The ECB's outlook will be crucial. The markets are currently assuming that key interest rates will continue to rise and two further interest rate hikes in the coming year," said Thomas Altmann from QC Partners.
“The actual market reaction is unlikely to be triggered by the interest rate move alone, but by the verbal tone at the subsequent press conference,” says Frank Sohlleder, analyst at broker ActivTrades. "Is the ECB uncompromisingly signaling further hikes or is it promising a respite in view of the economic risks? This rhetorical nuance will have a significant impact on the direction of the DAX in the afternoon."
For savers, higher interest rates mean that they can expect higher interest rates on current or fixed-term deposit accounts. However, if saving is worthwhile, it curbs consumption. Building interest and loans, on the other hand, are becoming more expensive.
The higher interest rates mean that investments become more expensive for companies and costs rise. These higher costs could end up with consumers. This in turn is likely to put a strain on the economy. The central bank must therefore try to walk a tightrope and combat inflation without strangling the economy.
One reason for the high inflation is the increased energy prices. Record high gasoline prices have pushed inflation in Germany to 2.9 percent, the Federal Statistical Office said today. “The increase in energy prices for fuels, caused primarily by the Iran war, has become particularly clear,” said the President of the Federal Statistical Office, Ruth Brand. According to the ADAC, a liter of premium gasoline cost an average of 2.145 euros in August, more than ever before. Given the continued rise in oil prices, there is no quick relief in sight.
Fears of an expansion of the Middle East conflict have recently boosted oil prices significantly again. Concerns about global supply shortages due to the expansion of the Middle East conflict, which now also includes fighting between Saudi Arabia and the Houthi rebels in Yemen, are supporting prices at a high level. A barrel of North Sea Brent costs more than $100 again.
The car manufacturer Porsche AG has earned one billion euros with its departure from the sports car manufacturer Bugatti and the electric car manufacturer Rimac. After approval from the authorities, the sale of the shares has now been completed, the VW Group subsidiary announced. Porsche wants to use 250 million euros of the proceeds to finance its pension obligations.
