Germany's blue-chip DAX closed 1.17% lower on Monday as investors assessed the latest private sector and economic data releases amid thin trading volumes due to a bank holiday in the UK.
Provisional data from Destatis showed that the annual inflation rate in Germany edged up to 2.9% in August from 2.8% in July, against the expected 3%. The core annual inflation rate, which excludes food and energy prices, remained unchanged at 2.4%.
"Looking ahead, the path of headline inflation remains highly affected by the war in the Middle East and oil prices. The recent swings in oil prices have been another reminder that it's almost impossible to come up with oil price assumptions for any inflation forecast that lasts for more than a few days," ING said. "The stage looks increasingly set for another rate hike at next week's ECB meeting. Not only because some ECB members actually advocated for a rate hike at the July meeting, but since the July meeting, the eurozone economy has shown an almost unexpected resilience to the war in the Middle East."
On the corporate side, Allianz (ALV.F) has reportedly been in talks with advisers to the AA for several months about a potential 5 billion-pound-sterling takeover of the British vehicle breakdown recovery group, banking sources told Sky News over the weekend. The current stage of negotiations and the possibility of a deal occurring are reportedly unclear. The German insurance giant, which toldthat it does not comment on market rumors, closed the trading session 0.49% in the red.
Aerospace and technology group OHB (OHB.F) secured a contract worth nearly 1 billion euros from European satellite operator SES to develop 18 medium Earth orbit satellite platforms for the European Union's Infrastructure for Resilience, Interconnectivity and Security by Satellite, or IRIS², program. The first satellites are scheduled for launch in 2029, with initial services expected to commence from 2030. At closing, OHB's stock jumped 6.28%.
In geopolitical news, amid the G20 meetings in the US, the European Union said it will continue to work closely with the US and other G7 and international partners to keep up pressure on Iran. The statement comes as Iran and the US exchanged air strikes for the first time since late July.
"The EU has adopted extensive sanctions to prevent Iran from exploiting the global economy and financial system to sustain its hostile actions and undermine international security. It remains ready to take further measures, where necessary, to safeguard its security and interests, including freedom of navigation through the Strait of Hormuz," according to a statement. "The EU welcomes efforts at ensuring that Iran ceases its destabilising activities and engages in peace negotiations with good faith, also through additional economic pressure, including through the US led Operation Economic Outcast."