Summary
- Airbus (AIR.DE) sees 72% increase in operating profit in Q2 2019
- DAX (DE30) pulled back to the key support zone, FOMC decision in the spotlight
- Infineon Technologies (IFX.DE) gains as Apple publishes better-than-expected results
European stock market indices lack common direction at the beginning of Wednesday’s session. Majority of the blue chips indices trade lower after the first hour of trade but gains can be spotted in Italy, Belgium or Poland. Builders and refiners can be found among the best performing sectors while real estate and utility companies underperform the most as a group.
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A streak of downbeat earnings report released yesterday caused DE30 to plummet. An over 2% decline brought the index to the support zone ranging 12090-12170 pts. Now the question remains what next? A lot will depend on today’s Fed decision as it is likely to impact US indices which often set the tone for equities from the other parts of the world. In case the US central banks points to less easing than markets expect, stock market may get pressured. In such a scenario a break below the aforementioned zone and subsequent plunge towards the 11850 pts handle may be on the cards. Source: xStation5
Airbus profit surges on Boeing’s struggle
Airbus (AIR.DE) released earnings report for the second quarter of 2019 recently and it has showed significant increase in operating profit. Namely, adjusted operating profit grew 72% YoY to €1.98 billion while revenue increased 23% YoYo to €18.317 billion. Better-than-expected results were to huge extent due to upbeat performance of the commercial aircraft unit. The European planemaker saw significant pick-up in narrow-body jets thanks to struggles of Boeing and its rival 737 Max planes. Airbus now expects to deliver as much as 890 jets this year. However, a point to note is that net orders in the first six months of the year reached only 88. While Airbus has an abundant backlog of orders, slowdown in new orders hints at potential struggles in the future.
DAX members at 8:57 am BST. Source: Bloomberg
Other company news
Deutsche Bank (DBK.DE) can be found among DAX winners today. The German lender is trading higher after a report surfaced saying the Bank is considering new cost-cutting measures. Namely, Bloomberg reported that the Deutsche Bank is considering centralizing IT budget in order to slash costs. Such a move would reverse decision from 2.5 year ago when Bank’s former management decided to decentralize tech spending and give more authority to chief of main business units. However, one should keep in mind that the lender did not comment on the report yet.
Infineon Technologies (IFX.DE) is one of the best performing DAX stocks today. The German semiconductor company is trading higher thanks to the better-than-expected earnings report released by Apple. Infineon is a major supplier to Apple therefore upbeat outlook presented in the report of the US company was enough to appeal to shareholders of the German tech company.
E.ON (EOAN.DE), the German utility company, is trading lower today after receiving a downgrade at JP Morgan. The Bank lowered recommendation for the stock from “neutral” to “underweight”. New price target was set at €8.30, down from €10 earlier, and implies around 10% drop against yesterday’s closing price.
Shares of Infineon (IFX.DE) halted upward move at the 200-session moving average (purple line on the chart above). A subsequent pullback brought the price to the 23.6% Fibo level of the June-July bounce. Upbeat results from Apple may buoy the sentiment towards Infineon for some time and, in turn, we cannot rule out a retest of the aforementioned moving average in the nearby future. Source: xStation5
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