After the interest rate decision by the European Central Bank, dax initially slipped by 1.7 percent. By the end of trading, the leading German index had largely made up for its losses and closed slightly lower at 12,904 points. In the fight against escalating inflation, the ECB raised its key interest rates more than at any time since the introduction of euro cash in 2002. The monetary authorities decided on Thursday to raise the so-called main refinancing rate by 0.75 percentage points to 1.25 percent. This is already the second tightening step in a row.
Investors were unsettled by gloomy statements by ECB President Christine Lagarde about Europe’s economic prospects. The economy will slow down significantly, said the ECB President after the interest rate meeting. Stagnation is to be expected later in the year and in the first quarter of 2023. This outlook is also reflected in the latest ECB staff projections for economic growth. They have been revised down significantly for the remainder of the current year and for 2023.
Financial stocks, which tend to benefit from interest rate increases, were the favorites in the Dax. Deutsche Bank shares recovered from their previous day’s losses with an increase of 5.6 percent. The shares of Allianz were listed 0.7 percent higher, those of Hannover Re and Munich Re each improved by two percent. In the M-Dax, Commerzbank shares rose by 5.4 percent. Pro Sieben Sat 1 lost three percent in value after the US bank Morgan Stanley downgraded the media group’s titles. The cyclical headwind, especially for the advertising business, is increasing, it said. On the other hand, SMA Solar was pulled up in the S-Dax by a positive study by Goldman Sachs on the US group First Solar and gained five percent. The US stock exchanges found no clear direction. A persistently robust US labor market supported prices, but the prospect of further interest rate hikes by the US Federal Reserve kept investors from larger purchases. Of the Dow Jones exited 0.6 percent higher. American Eagle shares fell 9 percent. The fashion retailer suspended its dividend payments after disappointing quarterly results.