DE30: DAX under pressure from falling sentiment in Europe and Asia

• Old Continent under pressure from falling sentiment in Europe and Asia

• Stifel downgrades German property developer

• BNP Paribas Exane raised recommendations on Continental AG (CON.DE) shares

• Airbus (AIR.DE) urges Chinese airlines to place orders for wide-body aircraft

Wednesday's session in Europe was not one of the most successful. The DAX index loses 0.7% in the face of a deterioration in overall sentiment in Europe and weak PMI data for services in China. Reviews of this data in Europe also indicated that, despite attempts to maintain sentiment in this sector, they are under similar downward pressure over time. Investor attention will focus today on the US durable goods orders data reading and the FOMC Minutes.

The mood in Europe during Wednesday's trading session is clearly negative. At the moment, the only sectors maintaining slightly better sentiment are aerospace/defence and pharmaceuticals.  Source: xStation 5

German DE30 futures are descending during today's session to support levels set by the 50-day exponential moving average (blue curve). The benchmark is currently losing close to 0.55%. Source: xStation 5

News:

Stifel downgrades German residential developers LEG Immobilien (LEG.DE; reko. €51), TAG Immobilien (TEG.DE; reko. €8.4) and Vonovia (VNA.DE; reko. €17.25) to 'sell', warning of a potential decade of limited earnings growth. Shares in these companies are losing heavily in today's trading. LEG Immo was down 1.0%, TAG Immo -2.3%, Vonovia -2%.

Listings of companies included in the property development sector. Source: xStation 5

BNP Paribas Exane raised its recommendation on the shares of Continental AG (CON.DE) to an "outperform" rating from its previous "neutral" rating. The target price was raised to €90 from the previous €75. Analysts at Exane believe that accelerating revenue growth, rebuilding automotive margins and a solid balance sheet could support the company in the near term as it makes additional inroads into a more supportive business environment. 

Continental (CON.DE) share chart, W1 interval. The company's shares are currently testing an important control point defined by the 50-week exponential moving average (blue curve).  Source: xStation 5

Airbus (AIR.DE) is urging Chinese airlines to place orders for its largest aircraft, as huge purchases by other carriers and supply chain disruptions extend waiting times during the post-Covid-19 pandemic travel boom. Airbus chief commercial officer Christian Scherer warned last month that waiting times for wide-body aircraft are also lengthening. The European aircraft manufacturer forecasts that Chinese airlines will need 9,440 new aircraft between 2023 and 2042, of which around 15% will be wide-body aircraft. Asia alone accounts for half of global aircraft demand over the next 20 years. Demand for larger units has declined recently, primarily related to US-China tensions and the recent 737 Max unit disaster.

Comparison of Chinese demand on the Boeing (BA.US) - Airbus (AIR.DE) line. Source: Bloomberg

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

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