European markets mixed as traders await central bank verdicts
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 20 2025
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Should l Buy GF?
Source: SeekingAlpha
Economic Indicators: The UK unemployment rate remains steady at 4.4% in January, while Germany's Producer Price Index (PPI) increased by 0.70% in February, falling short of expectations.
Market Developments: The pan-European Stoxx 600 index rose by 0.14% as investors await key monetary policy announcements, and Norway's sovereign wealth fund announced new investments in European property despite Hapag-Lloyd reporting a 19% decline in annual profits.
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Analyst Views on GF
Wall Street analysts forecast GF stock price to rise
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Current: 11.450
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Current: 11.450
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About GF
The New Germany Fund, Inc. (the Fund) is a diversified, closed-end management investment company. The Fund seeks long-term capital appreciation primarily through investment in middle-market German equities. The focus of the Fund's investments lies within Germany. Under normal market conditions at least 80% of the Fund’s net assets are invested in equity or equity-linked securities. The Fund invests in range of sectors, which include aerospace and defense; auto components; automobiles; banks; building products; chemicals; electrical equipment; independent power and renewable electricity producers; insurance; Internet and direct marketing retail; information technology (IT) services, life sciences tools and services; metals and mining; real estate management and development; software; textiles, apparel and luxury goods; trading companies and distributors; diversified financial services; commercial services and supplies, and others. The Fund's investment advisor is DWS International GmbH.
About the author

Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
- Market Fluctuations: The pan-European Stoxx 600 index fell by 0.20% to 604 points, as escalating tensions in the Middle East weighed on investor risk appetite, indicating market sensitivity to geopolitical risks.
- Surge in Natural Gas Futures: UK natural gas futures jumped 7% to 118 pence per therm, reaching a four-week high due to concerns over energy supply amid rising tensions in the Middle East, reflecting market anxiety.
- Bond Yield Movements: The yield on the US 10-year Treasury decreased by 1 basis point to 4.43%, while the UK’s 10-year yield rose by 10 basis points to 5.05%, showcasing differing market expectations regarding future economic conditions.
- Currency Market Dynamics: The EUR/USD exchange rate drifted down to key support levels of 1.1665/1635, as the dollar regained strength amid shifting global tensions, indicating increased market demand for the dollar as a safe haven.
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- Inflation Forecast Adjustment: ECB survey data indicates that professional forecasters expect inflation to rise to 2.7% in 2026 before easing to around 2% by 2028, reflecting increased market confidence in future price stability.
- GDP Growth Revision: The real GDP growth forecast for 2026 has been revised down to 1.0%, indicating that rising energy prices are dragging on the economy, which could hinder overall economic recovery.
- Core Inflation Stability: Core inflation is expected to remain contained at approximately 2.2% from 2026 to 2027, suggesting that the rise in energy prices is unlikely to trigger strong second-round effects, thereby alleviating pressure on policymakers.
- Tightening Policy Expectations: Slovak policymaker Peter Kazimir noted that the inflation outlook is tilted to the upside, reinforcing the need for policy tightening in the near term, with a June rate hike by the ECB appearing virtually certain in response to rising energy costs.
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- Germany PMI Revision: The S&P Global Germany Manufacturing PMI was slightly revised up to 51.4 in April, indicating a modest improvement in manufacturing activity that could positively impact economic recovery.
- Strong French Manufacturing: France's S&P Global Manufacturing PMI rose to 52.8 in April, demonstrating resilience in the manufacturing sector, which may boost investor confidence and market activity.
- Eurozone Manufacturing Recovery: The S&P Global Eurozone Manufacturing PMI climbed to 52.2 in April, reflecting a gradual recovery in the regional economy that could attract more foreign investment.
- Tariff Threats Impacting Automakers: Trump's announcement to raise tariffs on EU car and truck imports from 15% to 25% led to declines in European markets, particularly affecting automakers, which may impact industry profitability outlook.
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- Pound Surge: The pound climbed to $1.36 in early May, marking its highest level since mid-February, indicating market optimism regarding the UK economic recovery, which may bolster investor confidence in pound-denominated assets.
- European Retail Sales Growth: Retail sales in Switzerland increased by 0.5% year-over-year in March, while the Netherlands saw a 2.9% rise, highlighting the significance of consumer spending in the economic recovery and potentially boosting related companies' performance.
- WTI Crude Price Stability: WTI crude futures held above $105 per barrel, set for a second consecutive weekly gain despite dimming prospects for a US-Iran peace deal, reflecting ongoing market focus on energy demand.
- Bond Yield Fluctuations: The yield on the US 10-year Treasury remained flat at 4.39%, while the UK and Germany's 10-year yields rose to 5.04% and 3.03%, respectively, indicating cautious market sentiment regarding future interest rate movements.
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- GDP Growth Overview: Germany's GDP rose by 0.3% in Q1 2026, surpassing market expectations of 0.2%, indicating a gradual economic recovery after a downward revision to 0.2% at the end of 2025, which may support future policy adjustments.
- Unemployment Rate Stability: The seasonally adjusted unemployment rate in Germany remained at 6.4% in April 2026, unchanged from the previous revised figure, reflecting a slow recovery in the labor market post-pandemic, which could impact consumer confidence and spending.
- Market Reaction: European markets slid as yields reached multi-year highs, indicating investor concerns about economic prospects, which may lead to increased capital outflows and market volatility, affecting Germany and surrounding economies' stability.
- International Trade Challenges: Amid a fracturing global order, Germany faces new trade war risks, particularly from U.S. tariff policies, which could exert pressure on its export-driven economy, forcing it to seek new growth opportunities.
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- Inflation Rate Increase: Poland's annual inflation rate rose to 3.2% in April, indicating increasing price pressures that could impact consumer spending and economic growth.
- Economic Indicator Changes: Switzerland's KOF Economic Barometer climbed to 97.9 in April, suggesting signs of economic recovery that may influence future monetary policy decisions.
- Narrowing Trade Surplus: Hungary's trade surplus narrowed to €924 million in March, reflecting potential challenges to the country's export capacity, which could affect overall economic performance.
- GDP Growth Situation: Spain's GDP grew by 0.6% in Q1, exceeding market expectations of 0.5%, indicating strong performance in the recovery process that may boost investor confidence.
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