DE30: DAX weakens against other markets; Roche to acquire experimental drug💡

•  DE30 weakens against other benchmarks

• Investor attention focuses on the performance of Wall Street companies

• Roche (ROG.CH) close to securing experimental drug for Crohn's disease

• Ericcson (ERICB.SE) and Nokia (NOKIA.FI) in depressed mood after earnings warning

Indices in Europe are posting moderate rallies in this week's last trading session. The German DAX, on the other hand, is performing noticeably weaker, and futures on this index have slipped below the zone of recent local peaks.

The macro calendar is relatively poor today, nevertheless sentiment on Wall Street will be tested by the start of earnings season. Today, financial institutions in particular will show off their results. The incoming Q2 reports from yesterday and today generally show an upward trend, with many companies beating analysts' expectations. In particular, the results of JP Morgan (JPM.US), which turned out to be significantly higher than analysts had thought, came as a strong surprise. 

The mood in Europe during Friday's trading session is relatively mixed. The semiconductor market is in good spirits, while the fuel and insurance sectors are trading under downward pressure.  Source: xStation 5

German DE30 futures lost nearly 0.35% during today's session and are slightly below the zone of recent local peaks. Source: xStation 5

News:

Biotechnology company Roivant Sciences is close to a deal to sell an experimental drug for the treatment of inflammatory bowel diseases, including ulcerative colitis and Crohn's disease, to Roche (ROG.CH) in a deal that could be valued at more than $7 billion. Shares in the Swiss company are currently gaining nearly 1.5%. 

Source: xStation 5 

The gloomy mood also persists in the telecoms sector. Shares in Sweden's Ericsson (ERICB.SE) are down 10.5% after the telecoms equipment maker reported a 62% drop in operating profit, while Nokia (NOKIA.FI) shares are also down 10% after a profit warning.

Fears of a looming recession have forced telecoms companies to cut budgets and put device upgrades and digitisation plans on hold, slowing down plans by companies such as Nokia and Ericsson to expand 5G and broadband.

Nokia reported second quarter sales of €5.7 billion ($6.4 billion), less than the €6 billion expected by analysts surveyed by Refinitiv.

The company said it expects 2023 sales of €23.2-24.6 billion ($26.1-27.6 billion), lowering its previous forecast of €24.6-26.2 billion.

Ericsson (ERICB.SE) shares are sliding to levels not seen since April 2018. Source: xStation5 

Recommendations:  

• Merck (MRK.DE) gains more than 1.2% against a new 'buy' recommendation from HSBC. Target price at €200.

• Bayer (BAYN.DE) shares lose more than 0.5% after a downgraded 'reduce' recommendation from HSBC. Target price at €45. 

• Brenntag (BNR.DE) shares lose more than 3% and are the worst performing company in the DAX index after JP Morgan downgraded its recommendation on the company's shares to an "underwieght" rating. Target price at €66. 

• Telefonica Deutschland (O2D.DE) is up more than 2% in today's trading session after Morgan Stanley upgraded its recommendation to "equal-weight". 

• The shares of Sixt (SIX2.DE) are losing nearly 2% after the recommendation was reduced to a "hold" rating by Deutsche Bank. Target price at €125. 

The largest percentage changes in individual companies of the DAX index. Source: Bloomberg

News from individual companies in the DAX index. Source: Bloomberg