Summary:

  • European markets have opened lower on Friday with CAC40 leading the losses
  • Technical outlook for DE30 is not appealing
  • Adidas AG adds as much as 8 percent on the boosted full year outlook and higher margins

Investors in Europe have started the day with murky moods following a retreat from recent highs on Wall Street as earnings reports hit. Technology stocks were heavily sold off yesterday on the back of earnings news. Investors were unsettled when Amazon (AMZN.US on xStation5) posted a drop in profits and closed 3 percent below the flat line. In Europe, all major bourses are pointing to the downside with CAC40 (FRA40) falling off 1.18 percent in the early deals.

link do file download linkThe DE30 continues its downward move failing to even test supply zones located above latest highs. Source: xStation5

The DE30 continues its selling spree as earnings reports from US companies disappointed. The price now is facing a demand zone located between 11966 and 12114 where more buyers could step in to lift the German major index. However, one should remember that the current trend remains tilted to the downside, therefore short positions could be more appropriate. A first obstacle is located between 12233 and 12338 and higher between 12377 and 12568 being underpinned by a downward trend line. A break below a support (the green rectangle) could activate more sellers leading to a sharp decline in price.

link do file download linkDespite the European equities are being heavily sold off, Adidas (ADS.DE) emerges as a best performing stock with an astonishing 8.39 percent rise. Source: Bloomberg

At first, let’s take a look at performance of Asian indices overnight. The NIKKEI (JAP225) closed lower 0.60 percent, the Hang Seng (HKComp) slipped lower 0.94 percent, the Australian S&P/ASX200 lost 1.42 percent whereas the Shanghai Composite (CHNComp) managed to close above the break-even adding 0.11 percent.

Let us whip through European equity markets before we move on to company news. European indices continue declines as the DE30 is inching lower 0.57 percent, the FTSE100 (UK100) is trading lower 0.43 percent, the CAC40 (FRA40) is losing as much as 1.18 percent while the EuroStoxx50 (EU50) is edging down 0.53%.

Company news

Adidas AG (ADS.DE) boosted its full year outlook after higher margins helped the German sportswear maker to achieve an 18 percent jump in second-quarter operating profit. Company said that the operating profit improvement was driven by a higher gross margin which rose to 505 million euros from 429 million euros a year ago. Moreover, Adidas now projects 2017 sales to grow at a rate between 17 percent and 19 percent, against a previous forecast for 12-14 percent, and for the gross margin to improve during the second half of 2017. The stock has opened higher and now is trading around 192.00 price tag, which is a record high, currently up by 8.39 percent.

On the other side of the spectrum, Linde (LIN.DE) reported a sharp drop in first half cash flow, the stock slipped 2.27 percent in the early Friday deals. Moreover, the German chemicals group reported lower net profit for the second quarter because of restructuring costs but was able to increase revenues both in the gases and engineering divisions.