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Fourth Covid-19 wave hits German Ifo business sentiment

By Neil Dennis

11:35, 24 November 2021

Growth and economy jigsaw pieces lying on a German flag
There is a darkening mood amongst retailers in Germany – Photo: Shutterstock

The euro fell sharply on Wednesday after business sentiment in Germany took a stumble in November, reflecting the likely economic impact of the latest wave of coronavirus infections.

The single currency shed 0.3% to $1.1208 against the dollar and was down 0.4% to JPY128.91 versus the Japanese yen and 0.1% lower to £0.8392 against the pound.

Losses for the euro were in response to the German Ifo Business Climate Index, which fell to 96.5 in November, down from 97.7 in the previous month.

Expectations worsen

Both the current climate and the expectations elements of the index worsened as businesses grappled with supply chain bottlenecks, rising input costs and labour shortages.

Sentiment was least optimistic in the services sectors, particularly in travel and tourism, where trade is expected to be hit by the fourth wave of Covid-19 infections. Retailers’ sentiment also darkened as rising prices were expected to affect sales.


146.33 Price
-0.300% 1D Chg, %
Long position overnight fee 0.0113%
Short position overnight fee -0.0195%
Overnight fee time 22:00 (UTC)
Spread 0.010


1.27 Price
+0.040% 1D Chg, %
Long position overnight fee -0.0046%
Short position overnight fee -0.0036%
Overnight fee time 22:00 (UTC)
Spread 0.00013


0.67 Price
+0.180% 1D Chg, %
Long position overnight fee -0.0073%
Short position overnight fee -0.0009%
Overnight fee time 22:00 (UTC)
Spread 0.00006


1.09 Price
+0.030% 1D Chg, %
Long position overnight fee -0.0080%
Short position overnight fee -0.0003%
Overnight fee time 22:00 (UTC)
Spread 0.00006

The Ifo survey presented a contrast from the Purchasing Managers’ Index surveys published on Tuesday, which reflected higher growth expectations – albeit marred by rising inflation.

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“Given the return of Covid restrictions – which are likely to be tightened further soon – the index is all but certain to fall again in December,” said Melanie Debono, senior Europe economist at Pantheon Macroeconomics.

The implications for annual growth in 2021 were unlikely to be severe, but if the economy were to persist on this path it would leave 2022 on a lower starting base, Debono added.

Andrew Kenningham at Capital Economics agreed: “There is a growing risk that GDP growth grinds to a halt in the fourth quarter and it looks likely to remain weak early next year too.”

Read more: Surprise rise in eurozone business activity marred by inflation

Markets in this article

159.261 USD
-0.472 -0.300%
1.08839 USD
0.00028 +0.030%
0.85645 USD
0.00041 +0.050%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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