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European indices, Germany’s DAX 30 included, have spent Wednesday morning in the red as market participants hold fire, waiting to see what will come out of the Fed’s two-day meeting that will conclude with today’s announcement on fiscal policy into 2017. An immediate 0.25% increase in interest rates is considered a certainty, with any other outcome to prove to be a massive shock. The insight that is being anticipated is what further hikes are planned for 2017. The announcement of a second hike, at some point around May 2017, while not entirely priced into markets, Bloomberg data shows this is considered to have a 46% likelihood, would also not be unexpected. However, with Fed boss Janet Yellen said to be concerned that the inflation rate will be spurred by Trump’s planned expenditure on infrastructure next year, and U.S. Treasury bond yields already suggesting inflation is higher than had been forecast, there is speculation 2 2017 hikes could be announced. This would be considered a surprise, with Bloomberg data suggesting the likelihood of this happening is considered to be as low as 34%.
As midday approaches, the DAX 30 is currently down by 0.25% having opened down on yesterday’s close. The day’s biggest faller so far has been sportswear manufacturer Adidas, which has registered a loss of 1.75%. The company has just launched a limited edition run of its first 3D-printed running shoe. Conglomerate ThyssenKrupp is also falling today and has recorded a 1.56% loss so far. Other fallers include Fresenius Medical Care, a medical supplies company, and Fresenius SE, which provides products and services for hospitals and dialysis and outpatient care, which are down 1.24% and 1.6% respectively.
National airline carrier Lufthansa is showing the best gains of the day so far with a rise of 1.55%. The company’s share price took a hit in late November and the first days of December as industrial action by pilots over a pay dispute lead to thousands of cancelled flights. The share price has since recovered but, at around 12.79 euro is still shy of its 13.19 euro high of mid-November.
BMW is also up on Wednesday by just shy of 1%, with fellow car manufacturers Daimler and Volkswagen showing more modest gains of 0.15% each. Integrated energy and electricity utility Eon is up 0.6% while peer RWE is flat. The two big banks on the DAX 30, Commerzbank and Deutsche Bank are showing divergent fortunes with the former down 0.1% and the latter showing a positive return of 0.31%.
