DE40: Pullback in European stock markets 📉

• Sentiment worsens on European stock markets
• Investors react to lower earnings from BMW and Volkswagen

General market situation:

Thursday's session on European stock markets brings a deterioration in investor sentiment. Germany's DAX is currently losing 0.85% on an intraday basis. At the same time, the French CAC40 is down 0.91%. Large discounts are seen today in the banking and automotive sectors, where investors are reacting to the results of BMW and Volkswagen. After the session on Wall Street, investors will react to the results of Apple and Amazon.

Volatility observed today in the broad European market. Source: xStation 

Germany's benchmark DE40 is trading nearly 0.59% lower during Thursday's session. The index is still trying to stay above the key support level set by the 100-day EMA (purple curve on the chart). Breaking through the bottom of this zone and closing the intraday candle below could open the way to deeper declines set by the abolition of the 23.6% Fibo of the downward channel set by the upward impulse initiated in October 2023. The main resistance level remains the historical peak at 19,000 points. Source: xStation

News: 

BMW (BMW.DE) shares are losing more than 2.5% in today's session, falling to their lowest level since November 2022 following the release of second-quarter results. Investors were particularly concerned about the lower-than-expected EBIT margin in the automotive segment.

SECOND QUARTER RESULTS

• Automotive segment EBIT margin 8.4% vs. 9.2% y/y, estimated 8.75%
• EBIT 3.88 billion euros, -11% y/y, estimated 3.93 billion euros
• Sales 36.94 billion euros, -0.7% y/y, estimated 37.99 billion euros
• Automotive revenue 32.07 billion euros, +1.4% y/y, estimated 31.93 billion euros
• Financial services revenue 9.74 billion euros, +11% y/y, estimated 9.21 billion euros
• Motorcycle revenue 989 million euros, +0.1% y/y, estimated 971.7 million euros
• EBIT margin in motorcycle segment 11.1% vs. 16% y/y, estimated 13.2%
• Vehicle deliveries 618,743 units, -1.3% y/y, estimated 622,754

ANNUAL FORECAST

• Company forecasts return on capital in financial services at 15% to 18%, previously 14% to 17%
• Company forecasts EBIT margin in automotive segment at 8% to 10%, estimated 8.83%

Chart of the company's stock price with reaction to the release of quarterly results. Source: xStation 

Similar sentiment is observed today on Volkswagen (VOW1.DE) shares. The shares are losing more than 0.55% today, and here, too, the main driver of the downward momentum is lower EBIT margins. What's worth mentioning is that these are mainly due to the restructuring plan being implemented. 

SECOND QUARTER RESULTS

• Operating profit 5.46 billion euros, -2.4% y/y, estimated 5.17 billion euros
• Revenue 83.34 billion euros, +4.1% y/y, estimated 81.92 billion euros
• Operating margin 6.6% vs. 7% y/y, estimated 4.19%
• Deliveries 2.24 million, -3.7% y/y
• Automotive segment operating cash flow 8.40 billion euros, +36% y/y, estimated 7.41 billion euros

ANNUAL FORECAST

• Company forecasts net cash flow in automotive segment of 2.5 billion euros to 4.5 billion euros, previously estimated 4.5 billion euros to 6.5 billion euros, analysts expected 5.66 billion euros
• Revenues to grow 5%
• The company continues to forecast an operating return on sales of 6.5% to 7%, estimated 6.82%

Other news coming from individual companies in the DAX index. Source: Bloomberg Financial LP