DE30: Ifo amplifies recessionary sentiment in Germany📉

• DE30 caps some of the morning's decline

• Index remains below its 50-day EMA

• Ifo adds to gloomy investor sentiment

• Analysts cut recommendation on Siemens Energy (ENR.DE) shares

European benchmarks start the new trading week in a mixed mood. The reading of weak Ifo data imposed pressure on the indices from the Old Continent, which, however, with the approaching session on Wall Street, appear to have limited the initial declines. The macro calendar for today's session is empty, nevertheless investors interested in central banks' monetary policy will have the opportunity to listen to President Lagarde, who will address a conference in Sintra, Portugal.

Ifo index for June

• Business climate: 88.4 versus expected 90.8 and previous 91.7 previously

• Expectations: 83.6 versus expected 88.1 and previous 88.6 

• Current Conditions: 93.7 versus expected 93.5 and previous 94.8

Business sentiment in Germany is performing noticeably worse. Economists at the Ifo Institute noted that business demand is weak and the order book is shrinking. Industry expectations for exports have fallen as hawkish monetary policy around the world is reducing lending, resulting in lower demand. 

The weak reading of the Ifo expectations index is mainly due to declines in manufacturing and services. The chances of a third quarter with negative quarterly growth are increasing. Source: Ifo

The mood in Europe during Monday's trading session is relatively mixed. The sectors that are performing best at the moment are fuels and fashion. Automotive stocks are under pressure today. Source: xStation 5

German DE30 futures are experiencing moderate declines today, but these are extending the breakout below the support defined by the 50-day exponential moving average (blue curve), which is further reinforced by the psychological barrier of 16 000 points.  Should the declines deepen, the next zone to watch will be the 15,700-point region. A return to growth at this point depends on whether the demand side manages to get back above the previously mentioned supports, which are the main resistances. Source: xStation 5

News:

Siemens Energy (ENR.DE) extends today's dynamic declines linked to Friday's earnings warning for this year due to problems at the Siemens Gamesa unit (responsible for wind turbines). Today, the company's shares are losing almost 5% amid reduced analyst forecasts for the company's shares. Citi downgraded Siemens Energy's shares to Neutral with a target price of €18 and Jefferies downgraded the recommendation to Hold with a target of €16.50 per share.

Quality defects in the turbines, despite the massive pressure on earnings, could put an additional strain on the company's budget by nearly €1 billion.

Siemens Energy (ENR.DE) share chart, W1 interval. Source: xStation 5

Citi initiated a 'buy' recommendation on Sartorius (SRT.DE) shares with a target price of €375. The company's shares are currently gaining 0.6%.

The shares of Sartorius (SRT.DE) continue to remain below the support zone defined by the local minima recorded since May 2022. Source: xStation 5

The shares of Commerzbank (CBK.DE) are losing 1.85% as mBank (MBK.PL) made provisions for legal risk related to Swiss franc mortgages in the amount of nearly PLN 1.51 billion (USD 372 million). 

The shares of Commerzbank (CBK.DE) are down today on the wave of news about the legal risk provisions related to franc loans of the mBank (MBK.PL) subsidiary. However, the scale of the declines was mostly negated. Interestingly, the sell-offs tested the support set by the 200-day exponential moving average (gold curve) and now the rebounding movement is entering the zone of the lower limit of the uptrend (green line). Source: xStation 5

Largest percentage change in individual DAX index companies . Source: Bloomberg

Information from individual companies in the DAX index. Source: Bloomberg