The most important economic indicator for Germany fell to a nine-month low in November, a sign of the pessimism in the eurozone’s largest economy as a new government is on the verge of being created.
Data released Wednesday showed the Ifo business climate index fell to 96.5 in November from 97.7 in October, marking the fifth consecutive decline and the worst reading since February.
The Ifo Institute said supply bottlenecks and the fourth wave of the coronavirus are challenging German companies. The country may impose restrictions on business and consumer activity as neighboring Austria has done.
“Not only has Austria been a very good leading indicator for what will happen in Germany in terms of infections and government measures, this morning’s news that the SPD, Greens and FDP have come to a coalition agreement could also bring change,” said Carsten Brzeski, global head of macro at ING. “Germany’s reaction to the fourth wave has suffered from a power vacuum, with the caretaking government not wanting to decide on stricter measures and the incoming government not ready yet, and possibly not really wanting to start a new era with tighter restrictions,”
The euro
EURUSD,
-0.30%
fell to $1.1218 from $1.1249, and also dropped vs. the British pound
EURGBP,
-0.20%
and the Japanese yen
EURJPY,
-0.32%.
The yield on the 10-year German bund
TMBMKDE-10Y,
-0.227%
fell to -0.23% from -0.22, and the German DAX
DAX,
-0.68%
underperformed the French CAC 40
PX1,
-0.27%
and U.K. FTSE 100
UKX,
+0.07%.
Genus
GNS,
-15.47%,
a U.K.-listed animal genetics company, slumped 14% after saying volumes in the four months to Oct. 31 declined due to weakening Chinese demand.
Telecom Italia
TIT,
+16.21%
added 14%, extending gains since the KKR takeover approach. Its main union has called on the Italian state to take a greater role in the telecom, whose main shareholder Vivendi
VIV,
+2.23%
has reportedly resisted the offer.
