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German Shares End Week Lower; Zalando Slips on Regulator Probe

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German equities were in the red on the last trading day of the week, with the blue-chip DAX index down 1.29% at Friday's close, as shares in Zalando (ZAL.F) fell after the launch of a financial regulatory investigation.

Zalando was the worst performer, with its shares falling 6.32%, after the German Federal Financial Supervisory Authority, or BaFin, initiated a probe into the online retailer's full-year 2025 financial results over an alleged accounting breach, noting a potential failure to disclose a related-party transaction tied to its acquisition of About You Holding.

Meanwhile, some technology headlines weighed on investor sentiment, including news of Apple Inc. (APC.F) passing rising component costs to consumers and a New York Times report saying that OpenAI might push back its highly anticipated initial public offering.

Against this backdrop, German semiconductor manufacturer Infineon Technologies (IFX.F) declined 4.52%, while Apple's Frankfurt-listed shares lost 0.20% on Xetra.

In economic news, consumer inflation expectations in the euro area declined month over month. Based on the latest monthly European Central Bank Consumer Expectations Survey, median expectations for inflation for the next 12 months fell to 3.5% in May from April's 4%. Meanwhile, the forecast for the next three years and the five years ahead remained unchanged at 2.9% and 2.4%, respectively.

Back home, the ifo Institute said that German companies are accelerating their headcount reductions amid persistent market weakness, noting the layoffs are affecting most sectors except for the construction industry, which intends to maintain staffing levels "largely constant." The ifo Employment Barometer ticked down to 92.3 points in June from 93.9 points a month ago.

German Chancellor Friedrich Merz's coalition is said to be negotiating up to 20 billion euros in income tax relief as it seeks to advance its broader economic reform agenda. Leaders of the coalition will meet on Sunday to resolve differences over the proposed tax cuts, according to a Bloomberg News report.

On the geopolitical front, an attack on a cargo ship near Oman prompted the UN's maritime organization to pause its Strait of Hormuz escort operation, raising doubts over the preliminary peace deal between the US and Iran. "Iran's Persian Gulf Strait Authority warned that ships outside its designated routes travel at their own risk, while shipping data showed crude flows through Hormuz have risen to their highest level since the war began," Danske Bank wrote.

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^SSMI$DOCM.SW$UBSG.SW
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