Germany's blue-chip DAX closed 1.38% higher on Wednesday, as investors assessed fresh economic data alongside the latest updates on the European Union-US trade front.
Destatis reported that producer prices rose 1.7% year over year in April 2026, compared with a 0.2% decrease earlier and the market forecast of a 1.5% rise. The reading marks the highest increase since May 2023. The German Federal Statistical Office attributed the growth to higher energy prices, intermediate goods, and capital and durable goods.
"Today's producer price inflation confirms that a first inflation wave is in full swing. An inflation wave that remains mainly limited to energy prices but is gradually broadening. It won't be long before higher energy prices lead to knock-on effects on transportation and food costs. Needless to say, the longer the war in the Middle East and the blockade of the Strait of Hormuz last, the higher the likelihood that the initial energy price shock will not only have knock-on effects but could also be accompanied by additional supply chain frictions and, in turn, a self-enhancing inflationary spiral," ING wrote.
Markets also tracked the US-Iran conflict after Tehran warned of broader retaliation if the US resumes strikes, while continued disruptions in Hormuz kept oil prices volatile.
Meanwhile, in a bid to avoid higher US tariffs, the European Council and Parliament reached a preliminary agreement on regulations to scrap remaining duties on US industrial imports and grant preferential market access to select goods. The legislation is intended to fulfill the EU's obligations under the July 2025 trade pact.
The VDMA industry association, representing the European machinery and equipment manufacturing sector, said the EU should continue negotiations aimed at securing the same 15% tariff ceiling for remaining steel and aluminum derivative products, adding that planning certainty was crucial for manufacturers.
In corporate news, Infineon Technologies (IFX.F) was the top gainer on the index, climbing 5.11%, after it launched Moore4Power, an EU-backed semiconductor research and development project focused on smart power electronics, with 62 partners across 15 European countries.
Siemens Energy (ENR.F) gained 3.95% after announcing the early extension of its supply agreement with Austria-based energy infrastructure company Asta Group. Asta will continue supplying specialized copper and custom conductor components to all of the German energy technology company's European transformer plants through 2032.