German investor opinion remains optimistic despite political turmoil according to yesterday’s published economic data from economic institute ZEW and German Federal Statistic Office. The February ZEW Survey Expectations index came out at 17.80 (consensus: 16) against 20.4 for January, in line with December numbers amounting to 17.40. January Producer Price Index Y/Y was announced at 2.10% (consensus: 1.80%) against 2.30% the previous month, maintained at a high rate.
Political uncertainty remains around the German “GroKo” coalition that is supposed to be extended by Social-Democratic party (SPD) adherents on March 4th according to recent surveys anticipating a 60% support according to a survey from German Funke media group. In the case of a “no”, new elections would take place and new elections would probably occur, strengthening right extreme party “Alternative for Germany” (AfD) at the cost of SPD. The likelihood remains however slim, confirming our view that Germany remains in a positive growth setting, boosted by strong economic exports (December trade balance at EUR 18.20 billion) and sharp private consumption (January Consumer Price Index Y/Y at 1.60%, above 2 years’ average written at 1.10%), backing further improvement for the coming six months.
Yesterday the German DAX closed at 12’488 (+0.83%), supported by Materials (+1.44%), Utilities (+1.24%), Industrials (+1.12%) and Information Technology (+1.10%) while German 10-year Bund remained stable at 0.735%.
By Vincent Mivelaz