DE40: European stocks under pressure; Richemont and IAG in focus 💡

• European markets drop at the end of the week
• The main sectors losing during the session are fashion and automotive
• More than 7% is recorded today by the shares of IAG Group

Sentiment in the German stock market deteriorated noticeably during this week's last trading session. The sharp declines on European markets today were largely due to heavily overvalued stocks of automotive companies and those linked to the luxury goods sector. Investor attention today turns to data from the Canadian labor market and University of Michigan sentiment.

Sentiment in the European stock market is mostly weak today. Relatively good sentiment is seen only in the pharma and Reit sector. In contrast, the largest declines belong to luxury goods and automotive companies. Source: xStation5

Among DAX index companies, BASF, BMW and Daimler Truck are losing the most. Source: Bloomberg Finance L.P.

DE40 (D1 interval)

The DAX (DE40) stock appears to be following a technical correction scenario bounded by the 50-day exponential moving average (blue curve), and if the conditions for it are met, a rebound to the zone of historical peaks is not out of the question. On the other hand, however, a breakout below this zone may initiate a further downward correction, which may be limited by the 100-day EMA (purple curve).

Source: xStation5

News

Shares of the Bechtle Company (BC8.DE) are losing more than 1% in today's session after the company reported that its third-quarter financial results were below expectations, and the company itself is pulling back from previously issued annual forecasts.

Weakness in the luxury goods sector today is largely due to the poor performance of Richemont (CFR.CH), which is responsible for the Cartier and Vacheron Constantin brands. Sales in the first half of the year failed to meet analysts' expectations. Richemont's profit fell in the first half, as the Swiss luxury group's watchmaking division suffered from falling demand in China.

H1 RESULTS

• Sales 10.08 billion euros, estimated 10.18 billion euros
• Jewelry sales 7.09 billion euros, estimate 7.13 billion euros
• Watch sales €1.66 billion, estimated €1.75 billion
• Other sales €1.33 billion, estimated €1.33 billion
• Operating profit €2.21 billion, estimated €2.47 billion
• Revenue in Europe at constant exchange rates +5%, estimated +5.03%
• Revenues in Asia-Pacific at constant exchange rates -18%, estimated -17.6%
• Revenues in America at fixed exchange rates +11%, estimated +9.86%
• Revenues in Japan at constant exchange rates +42%, estimated +48.4%
• Revenues in the Middle East and Africa at constant exchange rates +11%, estimated +9.18%
• Operating margin 21.9%, estimate 23.9%
• Gross margin 67.2%, estimate 67.8%

Meanwhile, the shares of IAG (IAG.ES), a group of airlines such as British Airways and Iberia , are posting sizable gains today. The company's shares are gaining more than 7% after reporting better Q3 results and announcing a €350 million share buyback. Revenues came in at €9.33 billion, +7.9% year-on-year, against estimates of €9.22 billion. Adjusted operating profit, meanwhile, came in at €2.01 billion, +15% y/y, versus €1.78 billion expected. The company expects the “strong” financial performance to continue through the end of the year.