FRANKFURT, April 17 (Xinhua) — Despite the German government trying to tighten nationwide restrictions amid a recent surge of COVID-19 cases in Europe, the country’s stock market soared to record highs on Friday, showing a glimmer of hope for recovery.
Experts pointed out that the strong recovery of global demands has boosted prospects for export-oriented German-listed companies, addressing concerns over the current tough situation.
EXPECTATIONS FOR RECOVERY
The DAX 30, a German stock exchange barometer that measures the performance of the 30 largest and most liquid listed companies, closed above 15,459 points on Friday for the first time. Stocks of manufacturing giants, especially automakers, were fueled by upbeat data from the economies of China and the United States.
On Friday, China reported a record 18.3 percent year-on-year growth in the first quarter, while retail sales rebounded 34.2 percent last month, far more than expectations. Meanwhile, data from the U.S. overnight were also powerful with retail sales rising 9.8 percent in March compared to the previous month.
According to many institutional investors, European enterprises, particularly German listed companies, have established a global presence, and exports to China and the United States have an impressive influence on their performance.
In the first two months of 2021, European Union (EU) exports of commodities to China gained 13.6 percent year on year, while the whole export of the EU still registered a fall, according to data released on Friday by the EU statistical office Eurostat.
Thanks to the strong car demand in China and North America, German automakers hit sale records in the first quarter of 2021 with the global car sales of BMW and Mercedes-Benz rising 33.5 percent and 21.8 percent year on year, respectively.
German automaker Daimler Group made strong earnings of 5.75 billion euros (6.9 billion U.S. dollars) before interest and tax for the first three months, driven by robust demand in China for Mercedes-Benz cars, the company said in a preliminary earnings statement on Friday.
However, European economies are still facing pressures due to further restrictions. German Chancellor Angela Merkel on Friday called on the parliament to authorize the federal government to adopt measures against the coronavirus, including lockdowns, night curfews and suspension of schools and non-essential businesses.
Given Germany’s strained healthcare system, Health Minister Jens Spahn on Thursday pleaded with federal states to immediately impose further restrictions rather than wait for the federal “emergency brake.”
Even so, the Federation of German Industries (BDI) on Monday raised its export forecast for 2021 to a growth rate of 8.5 percent after the indicator fell by 9.3 percent last year.
“Foreign trade is becoming the central growth engine, especially with the U.S. and China,” said BDI President Siegfried Russwurm, adding that North America and Asia would help bring the global economy back on track.
The fact that the annual inflation in the eurozone hit its highest level in March since the onset of the pandemic also caused many concerns.
The European Central Bank (ECB) has been determined to keep inflation rates below but close to 2 percent. A higher inflation rate may force the ECB to change massive monetary easing — the major policy to support the bloc’s economic recovery.
Economic sentiment in the eurozone is clearly improving, while new lockdown measures still point to a weak start of the second quarter. Though pressures of inflation are increasing, it is probably too early to talk about a lasting trend, Peter Vanden Houte, an economist with international banking company ING, wrote in a report.
When investors grew increasingly wary about a delay of the EU recovery plan after the German constitutional court temporarily blocked the ratification process, the European Commission stated on Friday that this key financial plan would be implemented on schedule.
“I expect the bulk of national recovery and resilience plans to be officially submitted in the coming weeks. I am therefore confident that the implementation of the recovery fund is well on track and the pre-financing could start flowing into the economy in the summer,” said Joao Leao, Portugal’s Minister for Finance, after a video conference of EU economic and finance ministers. Enditem