DE40: German DAX extends its selloff📉

• German DAX trades lower today
• BASF to sell its Suvinil paint business in Brazil
• Siemens AG shares face pressure after Bank of America downgraded the stock to neutral

General market situation: European markets are experiencing broad weakness, with the Polish W20 leading declines at -1.41%, followed by the Italian ITA40 at -1.08%. The Spanish SPA35 (-0.65%), French FRA40 (-0.48%), and pan-European EU50 (-0.48%) are showing moderate losses, while the German DE40 (-0.47%) and Austrian AUT20 (-0.39%) demonstrate slightly better resilience. The Swiss SUI20 (-0.35%), Dutch NED25 (-0.17%), and UK's UK100 (-0.03%) are showing the smallest declines among European indices.

Dax Returns by Sector. Source: Bloomberg Financial LP

Looking at the German DAX sector performance, the market shows a predominantly negative bias with Real Estate (+0.73%), Health Care (+0.38%), and Communication Services (+0.21%) being the only sectors in positive territory. Industrials are the worst performer with a decline of -1.15%, followed by Materials (-0.58%) and Financials (-0.36%). Information Technology (-0.26%), Consumer Staples (-0.25%), and Consumer Discretionary (-0.74%) show varying degrees of weakness. Utilities are down -1.13%, contributing to the overall negative sentiment. The market breadth remains challenging, with 7 out of 10 sectors trading lower, suggesting persistent selling pressure across German equities. The aggregate DAX performance shows a decline of -0.44%, reflecting the broader European market weakness.

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

The German DE40 Index is trading below the 38.2% Fibonacci retracement level after breaking it today. For bears, the 50% Fibonacci retracement level is the first test, having previously acted as support. If breached, the 100-day SMA and 61.8% Fibonacci retracement level could be retested. For bulls, key resistance lies at the 38.2% Fibonacci retracement level followed by 50-day SMA. RSI shows bearish divergence with lower highs and lows, while MACD indicates negative sentiment. Source: xStation

News

• BASF (BAS.DE) has appointed Deutsche Bank to lead the sale of its Suvinil paint business in Brazil, valued at approximately BRL5 billion ($871 million). The divestment, which includes the Glasu! brand, is scheduled to launch in Q1 2025. Suvinil, Brazil's market leader in decorative paints, generates annual revenues of BRL3.2 billion with EBITDA of BRL360 million and employs 1,000 people. The sale aligns with BASF's September strategy announcement to exit Brazil's BRL12 billion decorative paint market, their last remaining presence in this segment globally.
• Siemens AG (SIE.DE) shares face pressure after Bank of America downgraded the stock to neutral, citing limited growth momentum for 2025 and concerns over its Digital Industries division's recovery. The broker reduced estimates by 5-6%, positioning their forecast 2-4% below consensus, and set a €200 price target. While strong free cash flows support the Altair acquisition and increased dividend, BofA suggests current valuations around 13x EV/EBITA offer limited upside potential.
• Merck (MRK.DE) has adjusted enrollment targets in its Phase 2 trial of Zilovertamab Vedotin for B-cell malignancies, reducing participant numbers by 18% to 223 from 275. The trial, spanning 108 sites and evaluating both monotherapy and combination approaches, is set to reach primary completion by March 2027. The study focuses on assessing safety and efficacy through Objective Response Rate per Lugano Response Criteria. This development is part of MSD's broader B-cell malignancy program, which includes five active trials with a total enrollment of 803 patients.

Other news coming from individual DAX index companies. Source: Bloomberg Financial LP