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European indices plunge
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DE30 tests lows from May near 14,800 pts
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Deutsche Telekom slumps on Goldman Sachs share sale
Stocks in Europe are trading under heavy pressure. Large-cap benchmarks from Western Europe trade 2-2.5% lower on the day. However, it is the Austrian ATX index that is Europe's top underperformer, trading almost 3% lower. Equities from the eastern part of the Old Continent look to be the most resilient but even in those cases drops of around 1% can be spotted.
German factory orders data for August was released today at 7:00 am BST and turned out to be a big disappointment. Factory orders dropped 7.7% month-over-month in August while the market expected a drop of just 2.2% MoM. On the annual basis, orders increased 11.7% but the market expected an increase of 16.4% YoY. Disappointing reading has added to concerns over slowing growth.
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Source: xStation5
DE30 has tested 200-session moving average during each of the past three sessions and each time bulls managed to defend this technical support. However, it has fallen at the start of today's cash session as European indices plunged. DE30 dropped below the long-term moving average and downward move accelerated. The index is trading almost 2.5% lower on the day and is currently testing the 14,800 pts area marked with lows from May 2021. While a recent sell-off has been quite a steep one, it is nowhere near as big as the largest DE30 correction during the post-pandemic recovery. The downward correction that occured in September-October 2020 saw DE30 drop over 2,000 pts! According to Overbalance methodology, trend reversal would be confirmed once the index delivers a deeper drop and in this case it would require a drop below 13,880 pts!
Company News
Deutsche Telekom (DTE.DE) is the worst performing DAX member today dropping 4%. While overall deterioration in risk moods is playing a role, the prime reason behind drop in shares of German telecom is company-specific. Goldman Sachs sold Deutsche Telekom shares that were part of an asset swap deal with Softbank for €16.95 per share - below yesterday's closing price.
According to a Reuters report, Volkswagen (VOW1.DE) will extend a partial production halt at its factory in Mexico to October 15, 2021. Halt was previously set to end on October 6, 2021.
Daimler (DAI.DE) announced that global sales in its Mercedes-Benz brand dropped 31% YoY in the third quarter of 2021, to 428 361 units. Company sold 61 652 electric vehicles and hybrids in Q3 2021. Daimler blamed weak deliveries on shortages of semiconductors. More importantly, the company expects the issue to continue to impact production and deliveries in the coming quarters.
Share price of Deutsche Telekom (DTE.DE) plunged today after Goldman Sachs sold the company's stock at below market price. Shares of German telecom company trade at the lowest level since May 2021 and are testing the 200-session moving average (purple line, €16.70 area) for the first time since March 2021. The next potential support can be found at the 61.8% retracement of the upward impulse launched in February this year (€16.25). Source: xStation5
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