DE30: Softer start in Europe, Daimler disappoints with sales

Summary:

• Stocks in Europe begin Wednesday’s trading slightly lower following falls in China
• DAX (DE30) could take another attempt to break its short-term resistance
• Daimler (DAI.DE) disappoints with vehicle sales in the US, is this a reason to worry about?

European equities have seen a softer start to Wednesday’s trading taking a leaf out of Chinese indices’ book which are set to close clearly lower today. Meanwhile, looking at the daily chart of the German stock market one may hope that the index could see a bounce from the current levels even as it failed to move through 12380 points on Tuesday. Moreover, one may spot that a range of trading has narrowed quite meaningfully of late suggesting that a breakout could take place before long.

The DE30 failed to break its short-term resistance on Tuesday, but it may still try to do so in the upcoming hours. Source: xStation5

Let’s identify two crucial things (in our view) at the chart above. First and foremost, the index attempted to breach 12380 points but it did not mange to do so after all suggesting that bulls may have not been so confident to put their money into riskier assets. Subsequently, we saw the index moving lower (as expected given the still valid range trading) albeit sellers ran into a hurdle in the neighbourhood of 12280 points. In the Wednesday’s morning the price is striving to bounce off this level, and if it does so one may expect it to attempt break 12380 points anew. Unless the index breaks 12280 points during the session, bulls may hold out hope for a resumption of the uptrend.

Daimler (DAI.DE) has not seen a fall yet despite disappointing sales numbers it released yesterday. Source: Bloomberg

Taking a look at Asian stock market we may conclude that Chinese investors have yet to cheer due to a RRR cut coming into effect this week as major indices are set to close significantly lower. Shortly before 9:00 am BST the Hang Seng (CHNComp) is losing 1.5% while the Shanghai Composite already closed with a 1% loss, and the Australian S&P/ASX 200 (AUS200) dropped 0.4%. At the same time European stocks are trading barely changed with the DE30 and the British FTSE100 (UK100) losing 0.2% each and being the worst performers among major indices across the old continent.

The macroeconomic calendar for today is rather not eventful hence final services PMIs from some European economies seem to be draw the most attention. Except France we were offered upward revisions to preliminary readings for Germany and the Eurozone suggesting a rising divergence between services and manufacturing. In turn, from Italy and Spain, where no preliminary prints are published, we got a mixed picture. In Spain services PMI came in at 55.4 points missing the median forecast at 56.2 whereas in Italy the same indicator showed a rise to 53.9 and beat  the consensus of 53.3.

Company news

Daimler (DAI.DE) is not among major movers today nonetheless it deserves more attention in our eyes because of its yesterday’s sales numbers. The company produced a 9.9% decline of vehicle sales in the US in June while luxury auto sales went down 9.7% in the month. The obvious question everybody is trying to get a reply is do these numbers constitute a reason to worry about? Given the stock performance we have seen so far today one may argue that the numbers offer on Tuesday were not a big deal, and actually this is true as the declines in sales had been mainly caused by a fire at supplier facility in May. It caused that availability of larger SUVs was limited.

Daimler looks encouragingly from a technical standpoint. Source: xStation5