- Better performance of far-right parties in European Election adds to market uncertainty.
- DAX loses after election results.
- Energy sector with the biggest declines.
The European Parliament elections brought a lot of uncertainty to the German market. A surprisingly high result was achieved by the far-right AfD party, which came in second, garnering 15.9% of the vote. Also, a strong surprise is the very weak result of the ruling SPD party, which garnered only 13.9% of support. The biggest drop in support was recorded by The Greens, which only came in fourth place in this election with 11.9% of the vote (they were the second force in the previous election with 20.5%).
The large drop in The Greens support is resulting in increased volatility in the shares of companies in the energy sector, which is losing -1.1% on the stock market. The Greens are a major supporter of Germany's energy transformation, causing their weaker performance to drag down renewable energy companies. Wind turbine maker Nordex is losing almost -4% today, while SMA Solar and RWE, companies related to photovoltaics, are down -3.3% and -1.6% respectively.
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Open account Try demo Download mobile app Download mobile appOverall, the entire election brought investors more uncertainty and concern about the future and trajectory of changes in both German and EU politics. Thus, red dominates the DAX index today. The main index loses -0.63%, falling to June lows.
Results of the German elections in 2024. Source: elecions.europa.eu
Sectors' performance in DAX index. Source: Bloomberg Finance L.P.
Most active stocks in DAX index. Source: Bloomberg Finance L.P.
Contract for DAX index (DE40) losses after elections, dropping to June's lows. It seeks support around 18489 pts. level, which is indicated by simple moving average for 50 days (SMA50). Market sentiment suggests, that this support might be broken and the contract might continue its decline towards 18390 pts, which creates the current sideways trend. The downward breakout might create potential for decline towards 18000 pts, which is the support level created by the consolidation area from April. However, we do not see many indicators for such strong declines. Top resistance level is around 18842,4 pts, which creates the ceiling of sideways trend. Breakout from it might indicate that bulls are reaching for new ATH. Source: xStation
Company news:
- Adidas (ADS.DE) shares have seen little movement so far, despite the upcoming European Football Championship. The event could be particularly important for the sports equipment manufacturer due to its sponsorship of the teams of three potential title contenders: The national teams of Italy, Spain and hosts Germany. The potential success of any of them could reflect positively on popularity and sentiment toward the company.
- Porsche (P911.DE) fell more than 3.4% today due to the dividend cut. Adjusted for the profit paid out, the carmaker's shares are losing 0.2% today.
- Cancom (COK.DE) is trading up the most today (by more than 6%) after a positive buy recommendation from Deutsche Bank with a target price of €42 (versus a current valuation in the range of €32).
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