DE40: DAX falls to pre-July levels

• DAX deepens declines 
• Global IT problems weigh on European companies
• PPI data remains in line with expectations
• Sartorius lowers expectations for the full year 

European markets remain under negative pressure, started earlier this week. Cautious investor sentiment was joined today by IT problems related to Windows, most likely caused by an update error from Crowdstrike. As a result, air traffic has been frozen, many banks are having problems processing transactions, and problems are seen in public transportation traffic. Technical problems quickly gripped most of the world, which further affected the valuations of European assets. Germany's DAX is losing more than 0.5% today, reaching close to this month's lows.  

PPI data for Germany remained in line with expectations (-1,6% y/y), therefore it didn’t have significant impact on German market. 

Health care losses today more than 2%, while financials add 1,1% decline due to the IT problems around the world. Source: Bloomberg Finance L.P. 

Airbus is one of the few companies that are gaining in today’s session in DAX index. The company received an important certificate, which opens the door to the commercialization of its long-haul aircraft project. Source: Bloomberg Finance L.P.

The DAX index contract (DE40) today continued the declines that have been ongoing in the German market since the beginning of the week. The contract's quotations are falling below the support zone at the level of 18427 points, which means neutralizing the gains the contract has made since the beginning of the month. A sustained breakthrough of this level could mean a downward movement towards the resistance set by the 100-session exponential moving average (EMA100) at around 18211 points. Source: xStation

Company news: 

• Sartorius (SRT.DE) presented its 1H24 results and provided forecasts for the full year 2024. The company achieved revenue increases in its key EMEA segment, which, however, failed to cushion declines in other segments. Final sales fell 3.2% year-on-year. This was also reflected in lower EBITDA (-8.8% y/y), as well as a drop in EPS to €2.15 (vs. €2.95 a year earlier). What affected the market's reaction the most was the lowering of forecasts for the full year 2024. The company expects to achieve an adjusted EBITDA margin of 27-29%, compared to the previous 30% and the consensus forecast of 29.8%. The lowering of forecasts is particularly surprising to the markets, causing the company’s shares to lose more than 12% today

1H24 RESULTS:

• Revenues: €1.68 billion (+7.5% y/y) 
  • EMEA:: €690.8 million (+3.3% y/y) 
  • Americas: €602.7 million (-6.5% y/y) 
  • Asia Pacific: €386.8 million (-8% y/y) 
• EBITDA: €471.4 million (-8.8% y/y) 
• EBITDA margin: 28.1% (-170 bps.) 
• Net profit: €60.9 million (-68% y/y,) 
• EPS: €2.15 (vs. €2.95 previous year) 
• Order intake: €1.56 billion (+7.5% y/y)

• Ubisoft (UBI.FR) is losing more than 14% today after the release of 1Q24/25 data and a cautious outlook for 2Q. The company reported €323.5 million in revenue (+12% y/y) and €290 million in net bookings (+8.3% y/y), versus the expected €299 million. The company's projections for Q2 call for €500 million in net bookings, which is 17% lower than consensus forecasts. Moreover, these forecasts seem conservative, given the release of Star Wars Outlaws this August. At the same time, Ubisoft reiterated its forecasts for the whole of 2024/25, with the announcement that two launches, Rainbow Six Mobile and The Disvision Resurgence, will be delayed beyond that period. Hence, the prospect of meeting forecasts puts even more pressure on major titles debuting this year, and given the major controversy surrounding the latest game in the Assasin's Creed series, this scenario is fraught with even more risk. 
• Lufthansa (LHA.DE) and Air France KLM (AF.FR) are losing out today by halting flights due to IT system failures. The airlines in particular were affected by the technical problems. Air France KLM said most flights were unable to operate. The paralysis affected airlines around the world. Germany's Lufthansa loses -1.7% today, while Air France KLM loses more than -2.5%. 
• Airbus (AIR.DE) has announced that it has received certification from the EASA (European Union Aviation Safety Agency) for the A321XLR aircraft model. With this, it has passed the final milestone before starting the commercialization of the long-haul aircraft project. The A321XLR is expected to allow flights of up to 11 hours.