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Bob Mason
Depositphotos_57621859_s-2019

German Business Confidence

In January, business sentiment waned in Germany, with the ifo Business Climate Index falling from 92.2 to 90.1. Economists had forecast a more modest decline to 91.8.

According to the January report,

  • After 8 consecutive rises, the manufacturing index fell from 1.4 to -3.0 in January. The decline was attributed to less optimistic expectations amongst manufacturing firms.
  • In spite of the COVID-19 pandemic, assessments of the current situation were better.
  • For the service sector, the business climate indicator fell from -0.4 to -4.4. Firms were both negative towards the current situation and more pessimistic about the coming months.
  • The trade business climate indicator took the biggest hit, however, tumbling from 0.3 to -17.2. There was a marked deterioration in both the current situation and towards the months ahead.

Looking at the sub-indexes:

The Business Expectations sub-index fell from 93.0 to 91.1, with the Current Assessment sub-index declining from 91.3 to 89.2.

Economists had forecast the Business Expectations sub-index to climb to 93.2 and the Current Assessment sub-index to fall to 90.6.

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Market Impact

Upon release of the figures, the EUR slid from $1.21730 to a current day low $1.21485 before finding support.

The DAX30 slipped into the red before finding support. A 0.08% fall into the red was minor, however, with the markets having anticipated a deterioration in business sentiment.

In the 1 hour run up, the DAX30 had been up by 0.52%, while up by just 0.07% in the 30-minute run up to the release.

At the time of writing, the CAC40 was down by 0.11%, while DAX30 and the EuroStoxx600 were up by 0.08% and by 0.24% respectively.

Concerns over the prospects of further measures to contain the COVID-19 pandemic pegged the majors back.

Hopes of U.S stimulus and corporate earnings results provided some much-needed support, however.

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