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Expectations for German economy brighten

Sentiment among German businesses improved for the fifth month in a row, according to a survey of roughly 9000 business leaders in Europe’s largest economy conducted by the Ifo Institute. The Ifo Business Climate Index rose to 93.3 points from 91.1 points in February. The improvement comes after the German economy shrank in the last quarter of 2022 as consumers pulled back due to inflation fears.

Alessandro Fezzi, LGT
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5 minutes
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The manufacturing component of the Ifo Business Climate Index rose considerably with sentiment improving in key German markets such as at automotive, chemicals and electronic companies. The improved mood comes after a year of high energy prices had put businesses in the manufacturing-heavy economy under pressure. While the prospects for the economy are brightening, the nation of over 80 million people was crippled by the largest strike since the early 90s with airports suspending flights and train services standing still on Monday.

In addition to the better sentiment in traditional manufacturing sectors, Germany remains in focus after the recent turmoil in the financial sector spilled over to Deutsche Bank at the end of last week. After falling 8.5% Friday, Germany’s largest lender rebounded by more than 6% on Monday. The banking sector as a whole experienced a moment of calm on Monday after US regulators said they would backstop a deal for banking group First Citizens BancShares to acquire Silicon Valley Bank, which was one of the largest bank failures in recent history. As a result, the US benchmark KBW Bank Index ended Monday up 2.54%.

In New York, broader stock indices also profited from the bounce in bank stocks on Monday. The Dow Jones Industrial gained 0.6% to end the day at 32’432.08 points. The S&P 500 increased 0.16% to finish at 3’977.53 points. On the Nasdaq, the major tech indices lost around 0.7%.

Markets in Asia also used the moment of calm in the financial sector to book gains. Hong Kong’s Hang Seng Index increased 0.4% and the Hang Seng Tech Index gained 0.35%. Australia’s S&P/ASX 200 rose 1.1% and Japan’s Nikkei made marginal gains. In mainland China, the Shanghai Composite was down slightly while the Shenzhen Component fell 0.33%.

Corporate news in focus: Sika AG annual general meeting.

Economic data in focus: Bank of Japan Governor Haruhiko Kuroda speaks at a fintech conference in Tokyo (06:00 CET), Bank of England Governor Andrew Bailey speaks at a committee hearing on Silicon Valley Bank (10:45 CET) and European Central Bank President Christine Lagarde speaks at a central banking innovation conference in Frankfurt (15:15 CET).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.

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