DE40: German automotive in the spotlight 📉

• DAX under pressure, but keeps zones close to ATH
• The German government is to lower its GDP growth forecast for 2024 to zero. It had previously forecast 0.3%
• Automotive companies under pressure on earnings warnings

Overall market situation:

Monday's session on European stock markets brings declines in most stock indexes. Germany's DAX is currently losing 0.35%. Britain's FTSE 100 is losing 0.51%. At the same time, France's CAC40 is losing 1.48%. Investors' attention today turns to corporate news, especially in the context of the reduction of earnings forecasts by Europe's major car companies. Moreover, despite the euphoria in China, declines are not being resisted by fashion companies. 

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

The German benchmark DE40 is trading nearly 0.10% lower during Monday's session. Despite the observed declines, the futures-based Index remains all the time within its historical peaks. The key support points of the broad uptrend appear to remain the zones of recent peaks and the 50-day EMA (blue curve on the chart).  Source: xStation

News:

One of the worst performing economic sectors in this week's first trading session is automotive. This is because, the main representatives of this sector, among others: Stellantis (STLAM.IT), Volksawgen (VOW1.DE) and Porsche (P911.DE) issued a profit warning, lowering their annual earnings expectations. Recall that Mercedes-Benz (MBG.DE) and BMW (BMW.DE) lowered their targets earlier this month.

Stellantis said it is accelerating plans to cut its U.S. stock as the global industry continues to deteriorate and competition intensifies. The company is responsible for brands such as Chrysler, Citroen, Dodge, Fiat and Peugeot. Stellantis expects adjusted operating profit margins of 5.5% to 7.0%, down from “double digits.”

Massive declines in auto company stock valuations in Europe, discounts were also seen in Asia. Toyota Motor closed down 7.6%, while Honda Motor fell 7% and Nissan Motor dropped 6%. Nissan Motor by 6%. South Korean companies Kia and Hyundai Motor fell more than 4%.

Despite another wave of Chinese optimism, declines are also not being resisted today by companies in the fashion sector, which were responsible for most of the gains in Europe as recently as last week. 

Source: xStation

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