Summary:
- Not everyone is downbeat about conducting business in the UK after Brexit
- DAX (DE30 on xStation5) keeps trading in the vicinity of the trendline
- BASF (BAS.DE) gains as CEO hints there is potential for profit growth in 2019
Stocks in Asia took a step back after the US indices failed to close on new 2019 highs yesterday. Chinese shares declined the most followed by equities from Australia. Lower opening was also observed in Europe where the UK and Russian stocks underperformed the most. Utilities were the most resilient in the first minutes of the session while car makers and IT stocks were the biggest laggards.
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DE30 (DAX futures underlying) failed to hold gains made at the beginning of the yesterday’s session. The index keeps trading in the vicinity of the downward sloping trendline and unless it pushes reasonably higher we cannot rule out a possibility of a pullback. Resistance zone ranging 11810-11910 pts remains the first near-term hurdle for buyers. Source: xStation5
According to The Sun and Daily Mail newspapers, the UK Prime Minister Theresa May is likely to propose to parliament officially rejecting the idea of no-deal Brexit. Such a move is said to be the aftermath of growing fear that the UK lawmakers may want to take control over the Brexit process following numerous failures of PM May. Word on the street was that the UK parliament may try to do such thing on Wednesday. Having said that, an attempt to rule out no-deal Brexit can be seen as desperate attempt to retain power by guaranteeing something she called “impossible to guarantee” less than two months ago. With one month until the United Kingdom is set to depart from the EU and no deal in sight, rejecting no-deal option and delaying divorce may be the only way for the United Kingdom to limit economic damage its economy is likely to suffer.
Often when we write about Brexit we also mention company-related headlines that picture how big is the uncertainty relating to conducting business in the United Kingdom. However, not everyone shares similar view. Just recently Amazon announced that it will create over thousand apprenticeships in the UK over the next two years, increasing workforce in the country by more than 3.5%.
Major European stock market indices after the first hour of trade:
- DAX (DE30): -0.37%
- FTSE 100 (UK100): -0.80%
- CAC40 (FRA40): -0.47%
- IBEX (SPA35): -0.31%
- FTSE MIB (ITA40): -0.24%
BASF (BAS.DE) gains on CEO promises despite mixed picture presented by earnings report. Source: Bloomberg
Company News
BASF (BAS.DE), the German chemical company, released earnings report for 2018. World’s biggest chemical producer managed to generate revenue of €62.675 billion, 0.79% above median estimate provided by Bloomberg. On the other hand, BASF failed to meet analysts’ expectations in terms of earnings - EPS of €5.87 was around 1% lower than consensus forecast. Nevertheless, the stock is trading higher today. Words of Martin Brudermueller, CEO of BASF, can be named as a reason. Brudermueller said that in case trade conflicts ease this year and the economic consequence of Brexit would be limited, it is likely that the company will get back to profit growth.
Seat, unit of Volkswagen (VOW.DE), announced that it has partnered with International Business Machines (IBM.US) to develop an app called “Mobility Adviser”. The app is aimed at helping drivers navigate through crowded cities. While this is not a blockbuster news that may make major turn at these companies, it should be noted that it is the first such app that will be using Artificial Intelligence technology.
Siemens (SIE.DE) is one of the few DAX members that manages to resist downward pressure today. The company was upgraded at JPMorgan. The Bank raised recommendation for the stock from “neutral” to “overweight”. One-year price target was increased from €115 to €118, implying 22% increase against yesterday’s close.
