DE30: DAX below 16,000 pts. Extended sell-off in Europe

• DE30 extends declines and slips below 16,000 points.
• German IFO business index reading surprises with sizable drop
• Indexes in Europe begin downward movement
• Lufthansa (LHA.DE) loses after CFO comments 
• Adidas (ADS.DE) and Puma (PUM.DE) under bearish pressure

The middle of the week brings a continuation of the downward wave among European benchmarks. Along with the German DAX (DE30), which is almost 1.3% below the bar, the FTSE (UK100) and the CAC40 (FRA40) are also losing a lot. The business outlook in Germany has deteriorated for the first time since October. Investors are today beginning to see anew the risks posed by the ECB's monetary tightening cycle carried out against a backdrop of weakening macro data.

The business expectations index compiled by the IFO institute fell and the index of the current situation in German business also came under pressure. The IFO president indicated that sentiment in the German economy had deteriorated significantly and warned of a weakening outlook around the summer period. The IFO Business Climate Index for Germany in May deteriorated significantly more than forecast.

• The reading indicated 91.7 versus 93 forecast and 93.6 previously. Forecast: 93.0; previous: 93,6)
• IFO expectations in Germany in May were 88.6 (forecast: 91.6; previous: 92.2)

In the past, the expectations index has been a proxy for German GDP readings. Source: Bloomberg

Futures contracts based on the German DAX index (DE30), H4 interval. The German benchmark is trading down today and struggling to climb above 16,000 points. For the moment, the SMA200 average (red line) proved to be a significant support, however, looking at historical price reactions, a breach of this average usually heralded a fall below it. Source: xStation 5 

News

The chief financial officer of Lufthansa (LHA.DE) has warned that it will take some time for the profitability of the acquired Italian carrier Alitalia. Lufthansa is to pay around €320 million for a 40% stake in the bankrupt company. Italian Finance Minister Giorgetti and Lufthansa's CEO will meet in Rome to conclude the deal with ITA Airways.

Lufthansa share chart (LHA.DE). The company's shares are losing more than 2% today, with the RSI indicator approaching 32 points and approaching oversold levels. The 'golden cross' formation has not been confirmed, the SMA100 average has not been confirmed due to recent declines. Source: xStation5

Heavily dependent on consumer demand and the general economy momentum, shares of sports footwear and apparel manufacturers Adidas (ADS.DE) and Puma (PUM.DE) are losing ground. The prospect of disinflation and recession could negatively affect the businesses of both companies. Adidas finally announced the sale of the Yeezy brand, which had been a marketing failure due to a break-up and controversial comments by rapper Kanye West, one of the faces of the brand. The closure of the brand cost the company almost $440 million in the first quarter of the year alone. Adidas intends to liquidate Yeezy stock with a retail value of €1.2 billion.

Puma shares (PUM.DE), W1 interval. Puma shares are currently close to the lows of the covid sell-off, and the intersection of the averages on the W1 interval indicates a bearish 'death cross' formation. Looking back, however, this intersection occurred just above the price bottom in 2009. Source: xStation5

As reported by the Financial Times, Siemens (SIE.DE) CEO Roland Busch has indicated that the company is not considering the option of withdrawing from the Chinese market, which accounts for 13% of the company's revenue. Moreover, the current CEO intends to increase its involvement in the Chinese market, which could be increasingly important for the German industrial giant's innovation and growth. 

Siemens (SIE.DE) shares are still respecting the 200-session average but the slowly turning momentum indicators and MACD may indicate a longer-term deterioration in sentiment. Source: xStation5Major percentage changes and news from individual companies in the DAX index. Source: Bloomberg
Changes in institutional holdings in individual companies of the DAX index (data from the last session). Morgan Stanley slightly increased its position in Zalando. UBS raised its stake in TUI despite share reductions by DWS and Union Investment. BlackRock reduced its position on Commerzbank and increased its exposure to Diebold Nixdorf and Freenet AG. Source: Bloomberg