DE30: DAX at 16,050 pts. Germany budget crisis with no influence on stock market

• DE30 stays above the 16,000 point barrier on the last day of the week
• Weaker Ifo readings and lower final Germany GDP
• Equity markets await PMI index releases from the US
• Budget crisis in Germany without impact on stock market

Situation on Germany stock market

Thursday's session on European markets is proceeding in a better mood. Investors are keeping a close eye on news of Germany's budget funding for the new year, after the Constitutional Court withheld hundreds of billions of euros in funding from so-called special funds that are not covered by the federal budget. The German Finance Ministry is trying to determine the effects and details of the situation and estimate its impact on state spending in the new fiscal year, which has been temporarily frozen. However, the problematic situation has not had a negative impact on the stock market, and companies linked to state procurement are not seeing major declines.

Today's macro readings from Germany came in weaker than expected, reassuring the market regarding the end of the European Central Bank's rate hike cycle. The key moment in today's session will be the release of the flash S&P PMI indexes from the US, which will shed more light on the US economy and will likely result in higher trading volume, as the reading will take place just 15 minutes after the start of the Wall Street session (3:45 pm). The reaction of indices overseas could significantly affect the closing of the week's trading on the floors of the European stock exchange, including the German one. The market expects slightly lower readings and a drop in the manufacturing PMI, to 49.9, below the key barrier of 50 points. 

Macro data from Germany (Ifo, GDP)

• Expectations: Currently: 85.2. Forecast 85.8 vs. 84.7 previously
• Current conditions: Currently: 89.4. forecast 89.5 vs 89.2 previously
• Business climate: Currently: 87.3. Forecast 87.5 vs 86.9 previously

Germany's final Q3 GDP reading indicated a decline of -0.4% y/y vs. -0.3% in the previous reading and -0.3% y/y in the previous quarter. On a quarterly basis, the reading invariably indicated a rate of decline of -0.1%.

At the moment, sentiment on individual European companies has deteriorated slightly. Source: xStation 5

DE30 chart (D1 Interval)

Futures based on the German DE30 are trading nearly 0.04% higher on an intraday basis and are slightly breaking out above the key resistance barrier set by the 16,000-point level. A possible sustained breakout above these structures could open the way for further rallies towards the local session peaks of late August/early September 2023. On the other hand, the key resistance zone for possible observation is the level of 15,700 points. Source: xStation 5

Analyst recommendations:

* Porsche SE (PAH3..DE): Barclays lowered its recommendation on the stock to 'Equival' with a target price of EUR 50 per share.

* Evonik SE (EVK.DE): Stifel analysts raised their recommendation to Buy with a target price of EUR 20 per share

* Continental (CON.DE): Barclays raised recommendation to Overweight with target price of EUR 90 per share

Covestro and Continental are the strongest companies among DAX index. At the same time, the weakest ones, Siemens Energy and Sartorius loses 1.3 and 1.9% respectively. Source: Bloomberg Finance LP