German Consumer Confidence Turns Higher, DAX recovers Early Losses

In some positive news for the German economy, it was reported today that a closely watched survey showed that German consumer confidence was rising for the first time after declining for four continuous months. According to a report released by the Gfk research group it showed that forward looking consumer confidence rose to 9.4 points for the month of January as compared to a reading of 9.3 during the month of December. The report is being seen as a huge positive for the economy by traders and analysts on the street.

The report showed that the willingness of German consumers to spend more rose. German consumers also expect their incomes to rise which is being seen as a huge positive. It is imperative to state that consumer spending is a closely watched gauge by traders and investors as it provides an insight into the inherent health of the economy. It is important to point towards the fact that the German economy has been robust in recent years with low unemployment and rising nominal wages. The sharp decline in energy prices has meant that consumers have saved more on energy expenses and could use the extra savings towards spending in the coming months. Many analysts believe that the increasing fear of terrorism following the attacks in Paris have not deterred German consumers’ mood.

The DAX witnessed a volatile trading session, opening higher but giving up most of its gains during intra-day trade. The euro was higher during the trading session moving above the psychological level of 1.10 against the dollar which is being seen as a huge positive. Traders and investors would be closely watching the economic reports coming out of China over the next few weeks as a sharp slowdown in the world’s second largest economy is seen as a huge negative.