Summary:
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German Economy Minister is optimistic about 2019
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DAX (DE30 on xStation5) struggles to distance away from the swing level around 10430 pts handle
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Infineon (IFX.DE) slumps following sales warning from Apple
Concerns over the global economic slowdown were renewed after Apple (AAPL.US) release a sales warning yesterday. In turn safe havens rallied and stocks in China underperformed. However, the overall Asian session can be named as mixed as Australian stocks rallied on the back of AUD weakening. Nevertheless, the direction at the beginning of the European session was clear - down. Most of the blue chips indices from the Old Continent launch Thursday’s trading lower with the Dutch shares being the biggest laggards. Miners and IT companies are among the stocks that feel the pain the most.
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The German DE30 (DAX futures underlying) managed to push reasonably higher yesterday yet all of the bulls’ effort was put in wane by today’s lower opening. The benchmark still struggles to distance itself from the swing area around 10430 pts handle. However, renewed global growth fears suggest that bears may be among winners in the days to come. In case the aforementioned swing level is broken some price action may occur in 10150-10250 pts area as it was in the second half of 2016. Source: xStation5
Peter Altmaier, the German Minister for Economic Affairs and Energy, addressed the German growth in a recent interview. The politician said that while Brexit, international trade and situation in the domestic automotive industry could have cooled expansion in the second half of 2018, the economy is likely to enter 10th year of expansion in 2019. This is due to the fact that domestic demand remains strong and helps at least partially offset decline in foreign buying activity. Moreover, the Minister said he hopes that new immigration law will be passed quickly as the country struggles to fill around 57 thousand trainee positions. Labour market in Germany is really tight therefore it may be crucial to attract workforce from abroad. The German government expects growth to reach 1.5-1.6% in 2018. In case the expansion prolongs into 2019, it would mark the longest period of increasing German economic activity since 1960s.
Major European stock market indices after the first hour of trade:
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DAX (DE30): -0.84%
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FTSE 100 (UK100): -0.23%
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CAC40 (FRA40): -0.82%
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IBEX (SPA35): -0.01%
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FTSE MIB (ITA40): -0.52%
Infineon (IFX.DE) and Wirecard (WDI.DE) are DAX biggest laggards today while Lufthansa (LHA.DE) and Deutsche Bank (DBK.DE) post decent gains. Source: Bloomberg
Company News
The turmoil on the financial markets that was observed during the Asian trading hours was spurred by a sales outlook cut delivered by Apple. Unsurprisingly, suppliers of the iPhone maker, including Infineon Technologies (IFX.DE), headed lower in all parts of the World. Infineon is the worst performing DAX member today and the downbeat moods may be here to stay for some time unless a breakthrough in US-China trade talks occurs. Nevertheless, Infineon assured that it is neither surprised nor worried about slowdown in China and that it is sure of meeting 2019 margin target.
On the other hand, Deutsche Bank (DBK.DE) is one of the DAX leaders today. Bank’s shares may benefit from words of Axel Weber, Chairman of the UBS (UBSG.CH). Weber said that his Bank is not looking into any merger at the moment. He reasoned his words saying that although UBS strengthened significantly since the financial crisis it is still premature to even consider mergers at this level. He said that mergers of big capital groups (like UBS and Deutsche Bank) paralyze companies for years and are serious hurdle towards further growth.
Despite a significant jump higher at the beginning of December 2018, Infineon (IFX.DE) quickly pulled back below the downward sloping trendline. The stock is testing the support level ranging €16.30-16.70 at press time and may be set to retest a low at €15.75 in case moods do not improve. Source: xStation5
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