Summary:
- German Finance Ministry expects subdued growth in the first half of 2019
- DAX (DE30 on xStation5) pulls back to the upward sloping trendline
- Wirecard (WDI.DE) moves lower after another Financial Times report
Declines on Wall Street and gains in Asia provided a landscape for a mixed opening on the Old Continent. Most of the European stock market indices started Thursday’s trading in red but some gains were spotted on the UK, Dutch and Italian markets. Miners and refiners outperformed while travels stocks led lower.
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Yesterday’s steep declines (mostly due to Bayer’s slump) pushed DE30 back below the breakout level of 11680 pts. The downward move is being continued today and the German index threatens break below the upward sloping trendline. In case bears continue to dominate the market we may see a test of the swing level around 11400 pts handle in the nearby future. Source: xStation5
Sometime ago we wrote that Germany targets significant carbon dioxide emission cuts by 2030s in order to conform to Paris Climate Accord. Just recently news surfaced saying that the German Chancellor decided to set up a “Climate Cabinet” that will be responsible for oversight of the German coal phase-out. The Cabinet will consist of Finance Minister, Economy and Energy Minister as well as Environment Minister. Three ministers will meet regularly to design policy for Germany's exit from coal. The Climate Cabinet is expected to publish a draft policy by year-end. Nevertheless, Olaf Schulz, the German Finance Minister, already hinted that Germany may not be able to meet EU requirements in needed time and in turn has set up reserves of €100 million for carbon emission purchases for each of the next few years. Note that the shape of policy is likely to have huge impact on the German utility sector.
The German Finance Ministry issued a monthly report today. Department said that total revenue during the first two months of the year was 0.2% higher than a year ago. However, a drop of 1.6% was spotted in February. Finance Ministry said that Brexit uncertainty and weak outlook on international trade hits business expectations and may result in muted growth during the first half of 2019. On the other hand, the Ministry noted that somewhat positive signals are coming from services and construction sectors and it may bode well for potential rebound in economic activity.
Major European stock market indices after the first hour of trade:
- DAX (DE30): -0.45%
- FTSE 100 (UK100): +0.41%
- CAC40 (FRA40): -0.07%
- IBEX (SPA35): -0.42%
- FTSE MIB (ITA40): +0.26%
Infineon (IFX.DE) moves higher on Micron forecasts while Wirecard (WDI.DE) drops after another FT report. Source: Bloomberg
Company News
Wirecard (WDI.DE) is trading lower today after the Financial Times issued another report on the company. FT said that company’s executives authorized four suspicious payments worth around half a million euro each. Such an allegation is, of course, in contrast with what Wirecard was saying. However, it should be noted that even if FT reports turn out to be true the reaction on the market may have been overblown. Aforementioned payments are said to be worth around €2 million total, what is more or less 0.1% of Wirecard’s revenue in 2018. Since was FT report was published Wirecard share price plunged almost 40%.
BMW (BMW.DE) took a hit yesterday after issuing a profit warning. The German carmaker said that earnings this year may fall below the level from 2018. The company cited trade tensions and unprecedented spending on electric vehicles as the main reasons behind expected 10% decline pretax profit this year. However, BMW will not sit and watch how its profits deteriorate. The company said it has set up €12 billion savings plan aimed at offsetting such negative developments.
Infineon Technologies (IFX.DE) can be found among DAX leaders today. As no company-specific news surfaced lately, today’s good condition can be ascribed to yesterday’s announcement of Micron Technology (MU.US). Micron said that it decided to lower production as demand for its key products is shrinking. However, the US chipmakers said that it still expects demand to rebound later this year. This final line can be seen as the main reason behind today’s good performance of the European chipmakers.
Infineon Technologies (IFX.DE) has been trading within a range limited by the €19 handle and the 200-session moving average (purple line) recently. However, the stock began to respect the 50-session moving average (green line) and in turn we can see a kind of triangle pattern on the chart. Source: xStation5
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