- DE40 loses 0.50% in the new week
- Strikes in Germany continue after the weekend
- Will the ECB cut interest rates four times this year?
European indices are mainly lower, similar to the futures contracts in the USA. Stock markets are somewhat calmer today. Volatility is lower because the US exchanges remain closed due to the federal holiday of Martin Luther King Jr. Day. Dax loses 0.40%, approaching the level of 16750 points, US500 loses 0.13%, while US100 is quoted 0.10% lower. In the forex market, we also do not observe major changes, however, the euro remains one of the stronger currencies compared to the rest of the G10 currencies.
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Farmers from across Germany gathered in Berlin on Monday with around 3,000 tractors, 2,000 trucks, and an estimated 10,000 people to protest against proposed tax increases. The mass rally, held at the Brandenburg Gate, marked the culmination of a week of demonstrations against the government.
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Deutsche Bahn, the German rail operator, has resumed its normal schedule following a three-day strike by the train drivers' union GDL, which caused thousands of train cancellations. Operations restarted smoothly on Saturday morning after an emergency timetable was used post-strike for preparation.
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The Dutch government is providing a €25 billion ($27.4 billion) loan to Tennet Holding BV, the state-owned grid operator, for crucial grid investments amidst uncertainty over the sale of its German network. This interim financial solution will bridge the gap until Tennet's German grid is sold or another financing method is secured.
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According to a Bloomberg survey of economists, the European Central Bank (ECB) is projected to cut interest rates four times this year, with each reduction being 25 basis points. These cuts are anticipated to start in June and continue in September, October, and December, ultimately bringing the deposit rate down to 3%.
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Philip Lane, the Chief Economist of the European Central Bank (ECB), warned in an interview that lowering borrowing costs too quickly could be counterproductive for the ECB's monetary policy. The premature rate cut, before fully conquering inflation, could lead to another wave of inflation and subsequent interest rate hikes, creating a worse scenario.
DE40 index is trading 0.40% lower while the American stock markets remain closed. Domestic strikes have not significantly affected the index's performance so far, but the situation is concerning. The index has been in a sideways trend since December 2023, remaining in the range of 16600–17000 points. Source: xStation 5
Percentage change in the quotations of companies included in the DE40 index. The best performers today are two companies Commerzbank and Continental, which are gaining more than 1.20%. However, declines prevail and we see that several companies are trading with declines approaching 2.00% are companies such as Zalando and SIemens Energy. Source: Bloomberg Finance L.P.
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