- European indices fall at the start of the week
- Fashion companies under pressure from China data and corporate warnings
- Swatch reports dismal results for H1 2024
General market situation:
Monday's session on European stock markets is marked by declines in fashion stocks. Weak GDP data and China's retail sales report led to a pullback on companies with sizable exposure to Asian markets. Germany's DAX is currently losing 0.5%, France's CAC40 is down nearly 0.6%, and Britain's FTSE100 is down more than 0.35%. The macro calendar for today's session is relatively empty.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app
European companies with sizable selling exposure to Chinese markets. Source: Bloomberg Financial LP
Volatility currently observed in the DAX index. Source: Bloomberg Financial LP
Germany's benchmark DE40 is trading nearly 0.2% lower for the first session this week. The index is currently negating the structure of the downward trend initiated on May 16. The continuation of the downtrend has led to the testing of a historically important support level in the zone of the 100-day exponential moving average (purple curve on the chart, all the while it remains a key support point). Locally, the most important resistance, after piercing the 50-day EMA (blue curve) and the zone of the July 5 peak (combined with the peak of April 2 this year), is now the historical peak at 19,000 points. Source: xStation
News:
Swatch (UHR.CH) shares are currently losing nearly 11%, the most since March 2020. The Swiss watch maker reported disappointing H1 results due to weak demand in China and currency effects.
H1 results
- Operating profit CHF 204 million, -70% y/y, forecast CHF 500.2 million
- Operating margin 5.9%, forecast 13.4%
- Watch and jewelry operating margin 11%, estimate 15.8%
- Net sales CHF 3.45 billion, estimate CHF 3.77 billion
- Sales at constant exchange rates -10.7%, estimate +1.86%
- Net profit CHF 147 million, estimate CHF 383 million
Comments:
- Group expects significant improvement in the second half of the year
- Sales decline due to sharp drop in demand for luxury goods in China
- Strongly negative operating result in the manufacturing segment in the short term due to deliberate maintenance of all production capacity and abandonment of layoffs
- "In June, the Group's operating margin rose again to over 15%, which is a positive sign for the second half of 2024
- Continued strong growth is expected in Japan and the US in the second half of 2024.
- The full positive impact of the cost reduction program implemented at the beginning of the year will be felt in the second half of the year
- The group expects the Chinese market to remain a challenge for the luxury goods industry as a whole until the end of the year
Burberry (BRBY.UK) has announced that it expects its financial results to be below consensus, and if this trend continues in the current quarter, it would expect to report an operating loss in H1 FY25, and operating profit in H1 FY25 to be below current consensus. The company's shares are losing more than 17% today.
Lufthansa (LHA.DE) shares are losing more than 2% after Stifel downgraded the company's stock to sell following Friday's profit warning on the German airline. The broker lowered its target price to €4.50 from €7, the lowest target price among analysts tracked by Bloomberg.
Other news coming out of individual companies in the DAX index. Source: Bloomberg Financial LP
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
