Summary:
- German factory orders rebound slightly in March
- DAX (DE30 on xStation5) climbs back above 12300 pts handle
- BMW (BMW.DE) dips on massive legal provision
European stock markets opened mixed on Tuesday following a generally upbeat Asian session. Some weakness could be spotted on the UK, French and Belgian bourses in the first minutes of trade while stocks from Spain, Italy and Germany moved higher. Real estate companies outperformed while banks lagged the most.
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German factory orders rebounded in March but the scale of rebound was rather minor. Source: Bloomberg
The German factory orders data for March was released today in the morning and it showed an awaited rebound. Namely, factory orders rose 0.6% MoM after two steep declines in January and February. Nevertheless, the reading was weaker than market consensus expected (1.4% MoM). Details of the report show that it is Germany who is struggling - domestic orders declined while export orders rose strongly. This shows that in case external demand weakens Germany may get back on the recession track. Note that with recent escalation of US-China trade war outlook for exports is quite bleak.
DE30 took a major dive yesterday along with other major stock market indices. However, the decline was halted after touching the support zone ranging 11080-11180 pts. The German index is back above the 12300 pts handle and test of the latest swing level (12400 pts) may be looming in case upbeat moods prevail. Source: xStaiton5
Legal provision weighs on BMW Q1 earnings
BMW (BMW.DE), one of the biggest carmakers in the world, reported earnings for the first quarter of 2019 today. Company’s net profit declined over 70% YoY to €561 million. EBIT at €589 million was 78% lower than in Q1 2018. However, BMW explained that it took a €1.4 billion legal charge relating to European collusion proceedings. Spare for this one-off item EBIT would be slightly shy of expected €1.7 billion. The company also generated revenue of €22.462 billion, what was more or less in line with expectations and showed a flat growth year over year. The stock may find itself under pressure in the days to come. BMW, like some other carmakers, made significant investment in China in order to set up vehicles there and export them to other parts of the world. As the Chinese government tries to make China leader in the EV field, electric vehicles may become the focus of the US in case trade war continues to escalate. Such a development could derail any forecasts of BMW management and turn 2019 in to a really weak year.
BMW (BMW.DE) pulls back from the resistance level that served as a support for a few years (€77.50). In case the pullback is to deepen, the question remains how will the price react to the support zone ranging €68.40-70.00. A break lower could pave the way towards 2016’s low at €63.50. Source: xStation5
Other company news
Telefonica Deutschland (O2D.DE) reached an agreement with Vodafone (VOD.UK). Under the agreement Vodafone will supply Telefonica with high-speed broadband. The move is aimed at winning approval from the European Commission for Vodafone-Liberty Global merger.
Vonovia (VNA.DE) expects 2019 fund from operations at €1.22 billion, 5% higher against 2018. Company also plans to increase investments this year to €1.3-1.6 billion range.
Henkel (HEN3.DE) report Q1 EBIT at €795 million, 5.6% lower than a year ago. Company explained that price war in Europe squeezed margins in home-care and beauty-care segments and it had a negative impact on Q1 margins. Nevertheless,the company confirmed full-year forecast of 2-4% organic growth in sales.
DAX members breakdown after the first half an hour of trade. Source: Bloomberg
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