Summary:

• European stock markets have opened lower on Thursday
• German DAX (DE30 on xStaiton5) could continue sliding
• BMW (BMW.DE) and Siemens (SIE.DE) among top movers as earnings season is underway

The European equity markets did not have a successful session yesterday as all ended the day lower. One of the reason for a decline could have been the euro ex-change rate which managed to surged above 1.19. Even as the pair reversed afterwards, the underlying trend remains by far bullish, hence as for now any corrective moves could be used to enter a long position. In turn, the higher euro could put a brake on the German DE30 performance.

The German DE30 has struck a resistance placed at around 12300 points and come back immediately. Source: xStation5

At first, let’s have a look at the technical view which appears to be in line with our predictions which were made on Tuesday. We argued two days ago that “assuming that the index is able to maintain above 12080 points and then it’ll break a short-term trend line, bears could lurk in the vicinity of 12200 points again.” The index achieved 12200 points and extended its gain to 12300 points.

Nonetheless, a resistance at 12300 points turned out to be too strong to break it, as a result, the index reversed to the downside. As for now, it seems that the price is eying 12080 points once again. If the DE30 keeps on sliding, a third try of breaking out of a support could take place as soon as today. A breakout could lead to an extended move lower towards 11800 points where a 38.2% retracement of an upward move since November 2016 is placed.

ProSiebenSat.1 Media and Siemens are among the worst performing stocks while Deutsche Telekom, Continental and BMW lead the gains in early trading. Source: Bloomberg

Spirits across the Asian session were not supporting gains in Europe at all. All major indices didn’t manage to add any gains for all a quite neutral session on Wall Street yesterday. The Hang Seng (HKComp) was the worst index which lost as much as 0.4% whilst its counterpart in the Chinese mainland Shanghai Composite (CHNComp) slipped all but 0.4% as well. Elsewhere, the NIKKEI (JAP225) edged down 0.25% and the Australian S&P/ASX 200 (AUS200) went down 0.16% as the trade data missed significantly forecast overnight.

Whipping through the European markets, losses can be seen almost across the board except for the Italian FTSE MIB (ITA40) which is gaining 0.2%. Otherwise, the DE30 is losing 0.27%, the CAC40 (FRA40) is edging lower 0.13%, the EuroStoxx50 (EU50) is slipping 0.3% whereas the British FTSE100 (UK100) is hovering around the break-even as investors could await the BoE’s decision which is expected to come in at 12:00 pm BST.

Company news

Let’s begin with ProSiebenSat.1 Media (PSM.DE) which reported on Thursday that its second-quarter consolidated net profit declined 14% to 117m EUR from last year’s 136m EUR. Besides, adjusted EBITDA rose 6% to 270m EUR while revenues increased 9% to 962m EUR. Even as the company confirmed its fiscal 2017 upbeat revenue and earnings outlook, the stock is losing momentum at the opening. 

When it comes to Siemens (SIE.DE), the company announced that it plans IPO of its healthcare unit in H1 2018 which could be seen as a further step in dismantling the engineering conglomerate, which reported quarterly profit missing estimates (profit from so-called industrial operations rose to 2.25b EUR against an estimate set at 2.33b EUR). As of yet, there have been no specific comments where new shares will be listed.

On the other hand, the German automaker BMW (BMW.DE) is one of the best performing stock on Thursday. The firm reported that profit rose to 2.21b EUR in the second quarter from 1.95b EUR a year earlier. The figure quite easily beat analyst expectations for 2.01b EUR. Moreover, the company hailed a 80% increase in annual terms in terms of electric vehicles sales. BMW makes the i3 and i8 battery cars and sells hybrid versions of conventional models such as the big 7-Series sedan.

BMW estimated EPS (coming from brokerage houses’ recommendations published during last 4 weeks) suggests a massive gap to catch up for the price. Source: Bloomberg