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DAX Index Climbs; German, Eurozone Construction Slumps Continue

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German shares closed Thursday in the green, with the blue-chip DAX index gaining 0.60%, as investors digested the latest construction PMI surveys and the newest updates on the US-Iran conflict.

The downturn in Germany's construction activity continued in May, with persistent sector-wide contraction led by the housing sector. According to S&P Global, the Germany Construction PMI Total Activity Index ticked up to 42.4 from April's 13-month low of 42.1, but remained far below the 50 no-change mark.

"Conditions in the construction sector remain challenging to say the least, with virtually no let-up on either the demand or cost front since April. Total industry activity continued to fall sharply during May, a reflection of the current backdrop of soaring material prices and heightened uncertainty which have severely suppressed demand in recent months," S&P Global Market Intelligence economics associate director Phil Smith said.

In the euro area, contraction in the construction industry also slowed in May amid a softer drop in new orders and cooling input cost inflation. Based on the latest S&P Global survey, the Eurozone Construction PMI Total Activity Index inched up to 43.7 from 41.7 a month ago.

On the geopolitical front, hopes for a de-escalation in the broader US-Iran war resurfaced after the US brokered a ceasefire between Israel and Lebanon, though uncertainty remained after Hezbollah reportedly rejected the proposal and Israel signaled it would keep troops in southern Lebanon, Reuters reported. "That ceasefire is conditional on Hezbollah also stopping fighting, but in theory, the news helps to take out a key sticking point in the US-Iran talks that was holding up a deal," Deutsche Bank Research wrote.

In corporate news, Lufthansa (LHA.F) said the nose gear of a Boeing (BCO.F) 787-9 Dreamliner it operates "unexpectedly retracted" while the aircraft was parked at a gate at Frankfurt Airport. The airline said only crew members and ground staff were on board at the time, with several employees sustaining injuries.

"We are currently investigating the exact circumstances together with the relevant authorities. Technicians and support staff are on site," a Lufthansa spokesperson told. Lufthansa gained 1.66% at close, while Boeing's Xetra shares were up 0.67%.

Suss MicroTec (SMHN.F) will make its debut on Frankfurt's MDAX index for the first time, starting on June 22. The semiconductor industry-focused equipment and processes company's inclusion reflects its strong market performance. Suss MicroTec fell 3.47% at the end of the trading day.

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Exchange-Traded Funds Lower as US Equities Fall After Midday

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Asia Markets

Swiss Market Index Drops as US-Iran Ceasefire Hopes Fade

The Swiss Market Index ended Wednesday trading 0.66% lower after the US and Iran exchanged fresh strikes overnight, dampening investor sentiment and casting doubt on the prospects for a temporary peace deal.The US Central Command said US forces launched "self-defense strikes" on Qeshm Island in the Strait of Hormuz "in response to attempted attacks by Iran across the Middle East." It added that Tehran fired missiles at Kuwait and Bahrain, which broke apart or were immediately intercepted. Meanwhile, Iran's foreign ministry "strongly condemned" the US attack on the Iranian tanker and Qeshm, Bloomberg News reported.In trade news, Switzerland is one of the 60 countries facing additional US tariffs following an investigation into imports of goods allegedly made with forced labor. The proposed additional duties range from 10% to 12.5%."[The] results of this investigation indicate that the acts, policies and practices of Switzerland related to the failure to impose and effectively enforce a forced labor import prohibition are unreasonable and burden or restrict U.S. commerce," according to a report by the US Trade Representative.On the corporate front, Partners Group (PGHN.SW) is limiting withdrawals at its $8.6 billion Global Value SICAV fund to 5% of net asset value per quarter, following a surge in redemption requests in the second quarter, Bloomberg News reported, citing a letter to investors it saw. The private equity firm sank 16.33% at close.Meanwhile, Nestlé (NESN.SW), which owns a 49% stake in yfood Labs, agreed to buy the remaining stake in the smart food brand from its founders for an undisclosed sum. The share transfer is expected July 3, subject to customary approvals. The food and beverage giant was down 0.62%.The Swiss government is due to release inflation and labor data on Thursday.

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Asia Markets

German Shares Retreat Amid US-Iran Clashes, Fresh Tariff Threats

Germany's blue-chip DAX index closed 1.31% lower on Wednesday, amid reignited tensions in the Middle East and new tariff warnings from the US.Deutsche Bank Research noted "increasing pessimism" over a swift US-Iran agreement to reopen the Strait of Hormuz following overnight hostilities. The escalations involved US strikes on Qeshm Island and reciprocal Iranian missile and drone deployments targeting Kuwait and Bahrain."Prior to that, we saw little sign yesterday of concrete steps towards an imminent deal... This backdrop means [West Texas Intermediate] crude is now $7 [per barrel] above Friday's close, with a +0.92% rise at $94.62/bbl overnight," Deutsche Bank wrote.On the trade front, Washington proposed new 10% to 12.5% tariffs on 60 economies, including the European Union, following an investigation into the import of goods allegedly produced with forced labor.Back home, final business survey data showed that Germany's private sector remained in contraction territory for a second consecutive month, as surging cost pressures and muted demand further eroded service sector activity. S&P Global said the final Germany Composite PMI Output Index ticked up to 48.8 in May from 48.4 a month ago, surpassing the flash estimate of 48.6 but remaining below the 50-point neutral mark. Final services PMI was 48.1, against the preliminary estimate of 47.8 and the prior month's 46.9."Demand for services continues to be stifled by a squeeze on spending power from the increased cost of energy and heightened levels of uncertainty, although, encouragingly, the rates of decline in business activity and new work eased, offering hope that any downturn in the economy in Q2 would be only modest," S&P Global Market Intelligence economics associate director Phil Smith said.On the corporate side, Bloomberg reported comments from Deutsche Bank (DBK.F) Chief Financial Officer Raja Akram, who said the German lender anticipates second-quarter credit loss provisions to come in slightly above market expectations. Speaking at an investor conference, Akram clarified that the 100 million-euro provision for the three months through June still represents a sequential drop compared with the first quarter. Deutsche Bank was down 3.65% at closing.

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