DAX Holds Ground on Ukraine-Russia Peace Deal Despite Fall in Consumer Confidence
Consumer confidence showed an unexpected drop, while the US brokers a peace deal for the Ukraine-Russia conflict.
- GfK/NIM Consumer Confidence declines to -24.7
- Incomes expectations worst in over 1 year
- Ukraine-Russia Peace deal keeps rally alive
The DAX gained 0.65% this morning as news arrived of a peace deal to end the Ukraine-Russia conflict. Consumer confidence continues to wane, and the main drivers of the market remain ECB policy and now the peace agreement.
Consumer Confidence Continues to Fall
The DAX took little note of the unexpected number for consumer confidence this morning. The index dropped 90 points and quickly recovered to push higher,
Forecasts had pinned today’s reading at -21.4, a slight improvement from last month’s -22.6. Today’s number for consumer confidence is the lowest since April 2024.
Households are concerned about the political and economic situation in Europe’s largest economy. Income expectations dropped to the lowest in 13 months based on higher prices and economic uncertainty.
The market is expecting the Bundestag to form a government quickly, if anything, in order to pass the next budget.
The winning alliance CDU/CSU faces a tall task to form an alliance with the socialist a green party. This unlikely coalition is the only path since the leader of the CDU has ruled out alliance with the second most voted party, AfD.
DAX Live Chart
Reprieve Comes from the Ukraine-Russia Peace Deal
The hopes of the swift formation of a government are giving the DAX momentum. And the peace treaty for the Ukraine-Russia conflict has added hopes for a more stable economic background.
The deal which presumably will create revenue from a minerals deal for the USA, may also lead to the EU lifting sanctions on Russia.
That alone could boost the German economy as energy prices would expectedly fall. Germany is the country with the highest electricity prices in the EU.
In 2024, the average household cost per kWh was €0.24, while for German citizens the cost averaged €0.40 per kWh.
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