DE40: DAX fluctuates amid Scholz confidence vote loss

• German DAX hovers near ATH
• Airbus shares rose following Deutsche Bank's upgrade to "buy" from "hold".
• Thyssenkrupp’s shares declined 2% after its subsidiary Nucera reported an EBIT loss of €14 million for FY 2023/24
• German Chancellor Olaf Scholz lost a confidence vote, with 394 votes against him, 207 in favor, and 116 abstentions.

General market situation: European stock markets are showing mostly negative performance, with Polish W20 leading the declines (-1.28%), followed by Spain's SPA35 (-0.54%) and Italy's ITA40 (-0.40%). Austria's AUT20 is down 0.39%, while the UK's UK100 has fallen 0.31%. Germany's DE40 shows a more modest decline of 0.13%, and Switzerland's SUI20 is marginally lower (-0.08%). The VSTOXX volatility index remains flat (0.00%). Only a few indices are trading in positive territory, with the pan-European EU50 and Netherlands' NED25 both up 0.11%, while France's FRA40 shows a slight gain of 0.13%.

Volatility is currently observed in the broader European market. Source: xStation

The German DE40 Index is trading near its all-time high, but momentum indicators suggest caution. The RSI has exited the overbought zone and is beginning a slow downtrend, potentially signaling weakening bullish momentum. Similarly, the MACD is nearing a bearish crossover, which could indicate a shift in sentiment.

For bears to regain control, the October high at 19,783 must be retested. A break below this level could pave the way for a retest of the early November high at 19,525, an area closely aligned with the 50-day SMA at 19,626, forming a critical support zone.

For bulls, key resistance is at the 161.8% Fibonacci retracement level at 20,566. This level has been significant in recent trading sessions and could either serve as a launchpad for further gains or signal the onset of bearish divergence. Source: xStation

Corporate News

• Airbus (AIR.DE) shares rose 1.6% following Deutsche Bank's upgrade to "buy" from "hold". The recommendation follows the share price's recovery of mid-May highs, signaling renewed bullish momentum as it moves closer to approaching its all-time high.
• Thyssenkrupp’s (TKA.DE) shares declined 2% after its subsidiary Nucera reported an EBIT loss of €14 million for FY 2023/24, compared to a €25 million profit in the previous year. The hydrogen subsidiary projects FY 2024/25 EBIT between -€30 million and +€5 million, despite order backlog exceeding €1 billion. Sales are forecast at €850-950 million, following a 32% increase to €862 million. The company has expanded its workforce from 675 to 1,012 employees.
• Mercedes-Benz (MBG.DE) works council chief Ergun Lümali expressed concerns about sales volumes, stating that falling below 2 million cars annually would be "unacceptable" for labor representatives. The company's car sales reached 1.46 million units in the first nine months of 2023, down 4.3% year-over-year, with full-year sales expected to fall short of 2023's 2.04 million units.

Political Developments

• German Chancellor Olaf Scholz lost a confidence vote, with 394 votes against him, 207 in favor, and 116 abstentions. This paves the way for snap elections, tentatively scheduled for February 23, 2025. The development follows the collapse of his coalition government in November amid budget disputes. President Frank-Walter Steinmeier is expected to formally dissolve the Bundestag within 21 days.

Economic Indicators

• German IFO data for November showed mixed results:
  • Business Expectations declined to 84.4 (forecast 87.5)
  • Current Assessment improved to 85.1 (forecast 84.0)
  • Business Climate Index dropped to 84.7 (forecast 85.5)