Local equities climbed on the last trading day of the month, with the blue-chip DAX index up 0.05% at Friday's close, with investors weighing the latest batch of German economic data against tentative hopes for a diplomatic resolution to the Middle East conflict.
According to data from Destatis, German annual inflation slowed to 2.6% in May, against the previous and expected 2.9%. The core inflation rate, which excludes food and energy prices, rose to 2.5% from 2.3% in April.
"Today's inflation data was a welcome, though not fully unexpected, surprise. However, it would be naive to think that the inflation wave has stopped before it really got started. Instead, inflation will crawl up in the coming months, probably reaching 4% by late summer. However, we take today's data as another piece of evidence that any repetition of the 2022 inflation shock is unlikely," ING said.
On the jobs front, federal agency Bundesagentur für Arbeit reported that Germany's unemployment rate slipped to 6.3% in May from 6.4% in April, below the consensus estimate of 6.4%. The number of unemployed individuals in Germany declined by 12,000, compared with the revised 19,000 increase earlier and the expected 11,000 jump, according to Investing.com data.
In geopolitical news, reports from Axios and Bloomberg of a tentative 60-day ceasefire extension between the US and Iran, alongside the resumption of talks about Iran's nuclear program, boosted investor sentiment. US Vice President JD Vance told reporters that the two sides were "going back and forth on a couple of language points."
"Those headlines helped to drive a sharp move lower for oil yesterday. So Brent crude pared back its earlier gains to close -0.62% lower, hitting a one-month low of $93.71 [per barrel], with further declines overnight to $92.40/bbl. Indeed, it also means that oil prices are down over -18% over May as a whole, which would make this the biggest monthly decline since March 2020, back when the Covid-19 pandemic began and the world moved into lockdowns," Deutsche Bank Research wrote.
On the corporate side, Deutsche Post (DHL.F), d/b/a DHL Group, unit DHL eCommerce, and the United States Postal Service signed an exclusive last-mile parcel delivery agreement. Expected to be worth over $10 billion, the multi-year deal will allow the German logistics group's subsidiary to scale its US market footprint. DHL fell 0.16% at the end of the session.