LGT Navigator

German business expectations brighten slightly

More economic data released Monday suggested the recent rebound in Europe’s largest economy may have room to go further. German companies’ future expectations have risen slightly, according to the monthly Ifo Institute survey. The result comes just after the country was confirmed to have avoided recession with slight growth in the first quarter. Markets were relatively calm to start the week with US and UK trading on hold due to public holidays on Monday.

Shane Strowmatt, LGT
Tempo di lettura
5 minuto
German economy
© Shutterstock

The Ifo Institute’s measure of business expectations for Germany increased to 90.4 in May from last month’s 89.7 points, the fourth monthly rise in a row. The broader ifo Business Climate Index remained flat at 89.3 points, while the current situation indicator of 88.3 was down from 88.9 points. Last week, the German economy was confirmed to have grown 0.2% in the first quarter, a leap from the previous quarter’s contraction of 0.5%. Germany’s Consumer Price Index is due out Wednesday. On Monday, Germany DAX closed 0.4% higher and the Euro Stoxx 50 gained 0.5%.

Also to start the week, two key figures signalled their support for the European Central Bank (ECB) to begin cutting rates when it announces its next monetary policy decision onThursday 6 June. ECB governing council member Olli Rehn noted that inflation appears to be falling in a sustained manner and at 2.4% last month is just above the central bank’s 2% target. ECB’ Chief Economist Philip Lane also supported a rate cut in a media interview released on Monday. In the last weeks, a consensus appears to have emerged among the ECB’s governing council members in favour of lowering rates in June, but rate cuts at further meetings this year remain less certain.

In the Asia-Pacific region, stock markets struggled to find a clear direction as they awaited the reopening of markets in London and New York on Tuesday. In Australia, the S&P/ASX 200 was trading 0.2% lower after retail sales came in lower than market expectations at 0.1% growth in April when compared to the previous month. In Tokyo, the Nikkei 225 fell 0.2% after prices for corporate services increased 2.8% on the year in April, the fast pace in nearly a decade. South Korea’s Kospi was trading 0.1% lower. Hong Kong's Hang Seng Index was up 0.2%, while the Shanghai Composite was trading marginally lower.

Corporate news in focus: Annual general meetings at Fraport, OMV and Merck & Co.

Economic data in focus: Swiss National Bank Chairman Thomas Jordan speaks, Austrian Manufacturing Purchasing Managers’s Index, Conference Board Consumer Confidence Index.


LGT helps you make informed investment decisions

Global economic and market trends at a glance

You can also follow us on Facebook or LinkedIn – or visit Insights and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

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