DE30/EUR

The Germany 30 or DAX 30 began the third quarter with a blip that saw its value drop to 15,133. The index recovered and then climbed steadily to reach close to the 16,000 mark in mid-August but failed to breach this resistance level. The Germany 30 remained range bound for a couple of weeks but fell again to 15,132 in mid-September on the resurgence of worries about the global economic recovery, after data showed a slowdown in China's growth. Investors also remained on the sidelines while waiting for election results to come in.

The DAX 30 underwent a historic revamp in the last week of September, with the addition of ten companies. With companies like European aerospace giant Airbus and online shopping behemoth Zalando joining the blue-chip index, the DAX 30 is now the DAX 40.

Retail sales in Germany contracted by 5.1% in July, significantly worse than the market expectations of a 0.9% decline. Food, beverages and tobacco staged the sharpest declines. Analysts expecting a rebound in the upcoming months, with retail sales likely to grew by 1.5% in August.

Germany reported a trade surplus of €18.1 billion in July, versus a €19.2 billion surplus in the year-ago period. Exports surged 12.4% to €115 billion, with exports to the European Union climbing 17.1%. Analysts expect the country’s trade surplus to shrink to €14.4 billion in August.

The European Central Bank kept interest rates unchanged at record-low levels during its recent meeting but announced plans to make asset purchases under the PEPP (pandemic emergency purchase programme) at a moderately lower pace for the rest of the year. However, policymakers did not issue any timeline or indicate the pace at which the tapering will be done.

Germany’s producer prices jumped 12.0% in August, following 10.4% growth in the previous month. This was the biggest spike in producer costs since December 1974. Analysts expect the country’s producer prices to surge by 12.5% in September.

Industrial production in Germany rose 1% in July, versus a 1% decline in the previous month. This marked the first growth in industrial output after four months of decline. Industrial production is expected to rise 0.8% in August.

Germany’s Gross Domestic Product grew 9.4% year-over-year in the second quarter, notching the first expansion in six quarters, with the easing of covid-19 restrictions. GDP growth is expected to slow to 4.2% in the third quarter.

The index could come under pressure in the fourth quarter if China’s economy does not regain its recovery momentum and the current issues in the global supply chain continues. The expansion of the index from 30 to 40 companies may create uncertainties, keeping investors cautious in the near term. Analysts on average expect the Germany 40 to exit 2021 below the 15,000 mark.