Fundamental Comment

Recovery in German economy supports euro, stocks

Recovery in German economy supports euro, stocks

The euro and European stocks rose on Tuesday after growth data from the German economy, which showed a large partial recovery during the third quarter of the year from the negative effects of the Corona pandemic, after it suffered during the second quarter of the year from an unprecedented contraction.

The gross domestic product in Germany during the third quarter recorded a growth of 8.5% compared to a contraction in the second quarter of 9.8%, and expectations indicated a growth of 8.2%. On the annual basis, the contraction reached 4%, compared to the same period last year, while the economy experienced a contraction of 11.3% in the second quarter. 

Also, the German economy released today an IFO statistic on business conditions in November, and it came in at 90.7, higher than expectations of 90.1, while the previous reading was at 92.5, and for the current conditions statistic, the reading came at 90.5, while expectations were at 87.5, and the previous reading was at 90.4.

As for the IFO statistic, it came in at a value of 91.5, less than expectations at 94, and the previous reading of 94.7.

This decline in the statistics of measuring performance and optimism in the German economy during the month of November came after the attack of the second wave of the Corona pandemic on the European region and with its impact and the increase in the number of daily infections, which forced many countries to re-impose partial lockdown measures again.

The euro rose against the dollar during today's trading by 0.4%, as the pair recorded its highest level today at 1.1889, after opening today's trading at the level of 1.1837. It is currently trading at 1.1884.

European stocks rebounded today, supported by positive news about coronavirus vaccines, in addition to an improvement in the performance of the German economy during the third quarter, where the Euro Stoxx 50 index recorded an increase of 1.08%.

The German DAX 30 index surged 0.92% and, Britain’s FTSE 100 index augmented 0.91% and the French CAC 40 index edged up by 1.24%.

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