Summary:
- European stocks take a dive at the opening
- DAX (DE30) tries to bounce off the support zone
- SAP (SAP.DE) share price drops the most since August 2015 after earnings release
European stocks started the day in red and the first hour of trading does not hint at reversal coming anytime soon. Significant declines are seen all across the Old Continent with Swiss SMI (SUI20) being the only blue chips index trading higher. The biggest declines are seen on the German, Spanish and Swedish stock markets.
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DE30 tries to snap losing streak and bounce off the support zone ranging 12150-12200 pts. This area saw some price action over the past 2 months and it looks like the price may respect it once again. In case an upward correction is delivered, bulls may aim for the last week’s close around 12300 pts. On the other hand, a break lower could see price dip to as low as 12000 pts. Source: xStation5
SAP share price drops the most since August 2015 after earnings release
SAP (SAP.DE), the German software company, has reported earnings for the second quarter of the year. The company generated a revenue of €6.656 billion against expected €6.707 billion. Adjusted EPS at €0.48 was 18.18% lower than the median estimate. Cloud segment revenue grew 40% YoY. Cloud booking at constant currencies grew 15%, a significant slowdown from 26% seen in the first quarter of the year. Nevertheless, the company reaffirmed full-year outlook. FY operating income is expected to come in between €7.85 billion and €8.05 billion. However, investors do not seem to be appealed as the share price is dropping around 7%, the biggest daily decline since August 2015.
DAX members at 8:29 am BST. Source: Bloomberg
Company News
Macquaire, the Australian investment banking company, issued a range of recommendations for the German public companies. Analysts of the company upgraded Telefonica Deutschland (O2D.DE) from “neutral” to “outperform” and set a price target at €3 (€2.5 previously). On the other hand, Deutsche Telekom (DTE.DE) saw a downgrade from “neutral” to “underperform”. Telefonica Deutschland is the best performing company from the MDAX index on Thursday morning.
S&P lowered credit-rating outlook for Daimler (DAI.DE) to negative following two profit warnings issued by the company. Daimler has a long-term rating of ‘A’.
Hochtief (HOT.DE), the German construction company, is experiencing a major share price drop today. The company holds an over 70% stake in the Australian construction company Cimic. Share of Cimic fell close to 20% today after earnings report showed that the Australian builder suffered declining sales in the second quarter of the year. Hochtief is the worst performing MDAX member today.
SAP (SAP.DE) had a good first half of the year - share price rallied over 43% and reached a new all-time high a notch below the €125 handle. However, with today’s drop YTD gain was trimmed to around 28%. The stock opened in the vicinity of 38.2% Fibo level and is trying to recoup some losses in the first hours of trade. In case an upward move is continued, the first resistance level to watch is at €115.10 handle, where 23.6% Fibo level as well as local highs from April and May are localized. Source: xStation5
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