GER30 Upbeat despite the Contraction of the Manufacturing Sector

  • GER30

GER30 Analysis

Preliminary data released earlier, showed that factory activity contracted in July in both Germany and Eurozone, as preliminary Manufacturing PMI dropped to 49.2 and 49.6 respectively.

This aggravates recession fears, which are already heightened from the prospect of Russia cutting off gas supply to the continent, despite the resumption of Nord Stream 1.

The data comes hot on the heels of the bold 50 basis points rate lift-off by the European Central Bank on Thursday [1], with monetary tightening playing into the economic downturn anxiety. However, the central bank did not sound overly committed to fighting inflation, nor did it offer any hints around its next move in September.

GER30 did not overreact to the aggressive hike in absence of any hawkish forward guidance, while today it finds support, despite the poor PMIs. Markets probably believe that prospects of a recession will tie the ECB's hands and make it less willing to pursue further aggressive tightening.

After June's collapse, the German index hit the lowest levels since March at the start of the current quarter, but has since staged a recovery and heads towards its best week since May.

It now tries to cover half of its decline from June's high to this month's low (13,542), but will likely need fresh impetus in order to surpass this area and push for 13,800-30.

The noteworthy recovery however, has stalled over the last few days and this creates risk for a return towards 12,813-00, but new 2022 lows (12,425) have a high degree of difficulty at this stage.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.



Retrieved 19 Jul 2024

${} / ${getInstrumentData.ticker} /

Exchange: ${}

${} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.