Germany’s Stock Market Soars Despite Weak Economy

Germany’s benchmark stock index opened at an all-time high on Wednesday as investors’ growing confidence that interest rates will soon be cut outweighs worries that the country may be suffering a recession, reported Anna Cooban for CNN.

The index, comprising the 40 most valuable companies in Europe’s biggest economy, has been climbing more or less steadily since late October.

The previous day, the DAX closed at a record high of 16,533 points—only for that peak to be surpassed on Wednesday when trading began. By 11:46 a.m. ET, the DAX was up 0.9% on the day at 16,679 points.

The index, comprising the 40 most valuable companies in Europe’s biggest economy, has been climbing more or less steadily since late October.

At the end of that month, official estimates showed that inflation in the 20 countries using the euro had slowed sharply, hitting its lowest level in more than two years. Price rises—which had forced the European Central Bank (ECB) into an unprecedented cycle of interest rate hikes—eased further in November, reaching 2.4%.

Investors’ expectations that borrowing costs would not be raised again got a boost on Tuesday when ECB board member Isabel Schnabel effectively ruled out further hikes, citing a “remarkable” fall in inflation.

Schnabel told Reuters that the central bank is on track to bring inflation down to its 2% target, making "a further rate increase rather unlikely."

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