Germany's blue-chip DAX index was down 1.14% at the end of Tuesday's trading, as investors digested fresh data releases, including the latest manufacturing PMI survey results and the eurozone's flash inflation figures.
Flash estimates from Eurostat showed that the annual inflation rate in the euro area climbed to 3.3% in August from 2.9% in July, consistent with consensus expectations, mainly driven by higher energy prices. On the other hand, the annual core inflation rate, which excludes energy, food, alcohol and tobacco, edged down to 2.4% from the previous 2.5%.
"Six months into the Middle East turmoil, core inflation stands at 2.4%, which is exactly where it was in February, the last month before the conflict started. A significant pass-through of higher energy costs to other prices has not materialised so far ... But of course, upside risks abound and the pass-through of costs can take time," ING said, noting that it expects core inflation to rise further in the coming months. "For the European Central Bank, the jump in the headline inflation rate makes a September hike easier to sell. But the stubbornly benign core inflation rate should make for an interesting debate about a possible subsequent hike into restrictive territory."
Meanwhile, the final S&P Global Eurozone Manufacturing PMI stood at 52.7 in August, compared with the previous month's 51.9 and the flash estimate of 52.8. In Germany alone, the final Manufacturing PMI reached a 51-month high of 54.3 in August, against the flash estimate of 54.1 and the prior 52.2.
On the retail side, data from Destatis showed that retail sales in Germany declined 3.4% month over month in real terms in July, following the revised flat reading in June.
In company news, Frasers Group plans to further raise its stake in German fashion group Hugo Boss (BOSS.F) to more than 50% through a potential acquisition of additional shares. British sports and luxury retailer recently secured a 47.89% interest following the expiry of the acceptance period for its voluntary public takeover offer for Hugo Boss. The stock was 0.80% in the green at closing.
Deutsche Post (DHL.F), d/b/a DHL Group, completed its corporate reorganization under which the German logistics group's publicly listed parent company now operates as DHL AG, representing the globally operating group. Deutsche Post AG, which remains a DHL AG unit, will continue to be responsible for the group's German mail and parcel operations. DHL fell 1.03%.
On the geopolitical front, Iranian President Masoud Pezeshkian said his country will "immediately reciprocate" if the US returns to the commitments it made under the memorandum of understanding signed in June, multiple media outlets reported. Meanwhile, President Donald Trump said "there will be a response" to Iran's attacks on US military bases in the Middle East amid a renewed exchange of strikes.