European stocks edged higher on Thursday ahead of the Bank of England (BoE) meeting later in the day. Germany’s DAX index went up by more than 0.62% after the release of German Ifo Business Climate Index. Other European indices like French CAC 40, UK’s FTSE 100 and Euro STOXX 50 rose by more than 0.50% each.
Germany’s Economic Stance
German business confidence was hovering at its highest level since June 2018. This pushed the DAX index higher. The Ifo Business Climate Index jumped from 99.2 in May to 101.8 in June. The index was stronger than the estimate forecast of 100.6.
Germany recorded stronger than expected economic data in June. German Business Expectations were up to 104.0 in June slightly surpassing the estimated forecast of 103.9. German Current Assessment also rose to 99.6 in June from 95.7 in May.
With the easing of lockdown restrictions in the country, economic recovery has been increasing at a faster pace. Chancellor Angela Merkel said that Germany was on the verge of an economic upswing. This was after Bundesbank chief gave a positive assessment on the economy.
Germany’s central bank raised its growth forecasts earlier this month. The bank expects a surge in the economic output. It also anticipates a slash in supply bottlenecks hampering the country’s important manufacturing sector.
According to Jens Weidman, the central bank expects the country’s economy to be back on its feet sooner. The economy is expected to reach its pre-pandemic levels soon and grow 3.7% in 2021 and 5.2% next year.
Successful vaccination rollout in the country has driven the largest jump in retail conditions in three decades. ING analyst Carsten Brzeski stated:
“The reopening of the economy on the back of a still accelerating vaccination rollout has clearly boosted optimism and seems to be outweighing any concerns stemming from supply chain disruptions.”
Heidelberg cement recorded the largest gains in the DAX index. The building material company gained 2% in its stock earnings days after the company announced its plans to build the world’s first carbon neutral plant in Sweden.
Siemens Energy AG gained 1.85% in its stock prices. The company won a contract on Wednesday to electrify a biorefinery in Germany. Continental AG gained 1.55% boosting the index.