Investor morale in Germany declined more than expected during October, ending a five-month streak of improvement, in light of the pressures of rising energy prices on private consumption and investment, according to data announced by the ZEW Institute for Economic Research on Tuesday.
The index fell to 28.1 points, compared to 34.7 points in the previous month, while analysts polled by Reuters expected it to decline to 30 points.
“Private consumption and investment remain weak due to high energy prices,” said the institute’s president, Achim Wambach. These prices put pressure on real incomes, raise production costs, and keep inflation high for a longer period.”
The Federal Statistical Office had announced earlier, Tuesday, that producer prices in Germany recorded their fastest rise in three and a half years in September, driven by an increase in energy prices as a result of the Iranian war.
High oil and natural gas prices due to the conflict have slowed the long-awaited recovery in Europe's largest economy. Wambach said that the economy is gradually emerging from recession, but its recovery still lacks the elements of self-sustainability.
The ruling coalition in Germany is facing increasing pressure with the rise of the far-right Alternative for Germany party. The party's successes in the recent regional elections raised growing concerns among the major parties and revealed tensions within the ruling coalition. The resignation of Labor Minister Barbel Bass last week also added to the uncertainty.
“Recent political developments are likely to have increased uncertainty about the rapid implementation of the reform plans announced over the summer,” said Felicitas Hinze, an economist at Deutsche Bank Research.
On the other hand, the index, which measures investors’ assessment of the current economic situation, recorded a greater improvement than expected, rising to negative 35.9 points, compared to negative 47.1 points in September.
The German Ministry of Economy said earlier this month that the Iranian war did not negatively affect the economy to the extent that had been feared, while raising its expectations for economic growth during the current year and next.
“Thanks to the high level of backlogged orders, the industry will initially be able to increase its production,” said Thomas Getzel, chief economist at VP Bank. This is also the reason for the improved economic outlook.”
The German economy recorded growth of 0.3 percent during the second quarter. Gitzel said that the performance, which was characterized by strength beyond expectations during the first half of the year, would support growth in 2026, noting that the ZEW survey does not indicate significant new momentum during the last three months of the year, after the economy has likely achieved limited progress in the third quarter.
The results were based on the responses of 178 analysts and institutional investors who participated in the institute’s survey during the period from October 12 to 19.
The main Saudi market, TASI, ended Tuesday’s session with a decline of 1.7 percent, with the index closing at 9,952 points, down 172 points, recording the lowest close since April 2021, amid trades with a total value of about 3.8 billion riyals.
The index moved during the session between 9,941 points as the lowest level and 10,116 points as the highest level, while its losses since the beginning of this year reached about 540 points, equivalent to 5.1 percent.
The session witnessed a decline in a number of leading stocks, as “Saudi Aramco” shares declined by 1 percent to 25.48 riyals, and “Al Rajhi Bank” shares declined by a similar percentage to 60.15 riyals.
The shares of “Etihad Etisalat”, “PSF”, and “Yamamah Cement” fell by rates ranging between 1 and 3 percent, while “Yansab” shares fell by 7 percent.
The shares of “SABIC Agricultural Nutrients” and “Bank Albilad” also decreased by 3 percent each, with the first closing at 109.80 riyals, and the second at 21.47 riyals, following the announcement of the financial results for the third quarter of 2026.
“Tihama” stock topped the list of declining stocks, declining by 8 percent, while “Azm” stock topped rising stocks with gains of 4 percent.
