The European Central Bank (ECB) reports that the rate of disinflation is increasing

The European Central Bank (ECB) reports that the rate of disinflation is increasing

The European Central Bank (ECB) has decided to reduce the key interest rates in the euro area again by 0.25 percentage points each. The European Central Bank also avoided giving any specific indications about further interest rate moves, saying that future decisions will continue to be based on data.

The interest rate cut had almost been anticipated by the financial markets, given that consumer price inflation had fallen to 1.7 per cent in September, its lowest level since mid-2021.

Speaking to the press, European Central Bank President Christine Lagarde was keen to emphasise that all the data points published in the last five weeks clearly indicated an accelerating process of disinflation, but also that the inflation rate would rise slightly by the end of the year before settling at the expected 2% by mid-2025.

Lagarde also pointed to potential geopolitical risks that could potentially halt the decline in inflation rates. However, the European Central Bank generally believes that the risks to inflation remain tilted to the downside.

The futures markets are currently signalling that there is about a 50 per cent chance that the central bank will lower interest rates by 0.5 percentage points at the upcoming meeting in December. The euro fell to the lowest level against the US dollar since 2 August.

DAX- Technical analysis

The DAX reached a new all-time high of 19,680.5 yesterday, with the 19,495 mark acting as support and 19,800 as resistance. The RSI and stochastic RSI continue to show bullish tendencies.

US data points to a ‘soft landing’

US retail sales rose 0.4% in September compared to the previous month. Excluding motor vehicles and fuels, the increase was 0.7%. Compared to the previous year, retail sales rose 1.7%. Initial jobless claims fell by 19,000 to 241,000 last week, reversing the previous week's high figures, which were the highest in 14 months due to hurricanes Helene and Milton. Nevertheless, analysts had expected a higher number of claims for the current week. Overall, the data points to a slightly cooling labour market that is still proving its strength, along with strong consumer spending, supporting the thesis of a ‘soft landing’ – a gradual economic slowdown without entering a recession. In response, US Treasury yields rose across the curve, while the S&P 500 rose 0.6% and the NASDAQ 100 rose 1%.

Corporate News