FRANKFURT (dpa-AFX) – Concerns about a continued escalation in the trade conflict between the economic powers USA and China destroyed the attempt at recovery on the German stock market on Tuesday. Investors are also cautious given the high level that the DAX has now reached, as the reporting season starts in the USA with the quarterly figures from the major banks later in the day.
In early trading, the leading German index lost 1.1 percent to 24,111 points. On Thursday it had reached a record high of 24,771 points. The MDAX with medium-sized companies lost 1.3 percent to 30,040 points on Tuesday morning. The Eurozone leading index EuroStoxx 50 fell by 1.1 percent to 5,510 points.
After the trade dispute between the world’s two largest economies escalated again on Friday, in which US President Trump again struck a more conciliatory tone towards Chinese President Xi on Sunday, China now spoke up again. The Ministry of Commerce in Beijing reiterated its intention to fight the trade dispute with the USA to the end, even if China remained open to negotiations.
Analyst Martin Utschneider from Robomarkets explained the current situation for the German leading index from a technical chart perspective. The Dax is again in a sideways trend as long as it does not fall below 24,162 points. This is the level from which the stock market barometer managed to jump up to the record high of 24,771 points at the start of October. “If there is no stop at 24,162 points, then the next benchmark would be the 38-day line at 23,923 index points.”
Before JPMorgan (JPMorgan ChaseCo) and Wells Fargo (Wells FargoCo) and shortly afterwards Goldman Sachs and Citigroup announced their third-quarter figures in the early afternoon, the two German bank stocks were weak with the market. Deutsche Bank lost 1.4 percent and Commerzbank 0.7 percent.
Continental (Continental) was one of the biggest losers with a loss of 3.3 percent. They were hit by a surprisingly severe profit warning from competitor Michelin (Michelin (Compagnie Générale d Etablissements Michelin SCPA)). JPMorgan analyst Jose Asumendi sees Michelin’s statements as having limited impact on Conti, citing weaker sales in the U.S. trucking and agricultural sectors. However, he now assumes that in the second half of the year the price/mix trends and the expectations about the improvement in earnings at Conti will be closely examined from quarter to quarter.
BASF (BASF) lost 1.3 percent. The private bank Berenberg downgraded the chemical company’s paper to “Sell”. Analyst Sebastian Bray justified his sell recommendation because it is in the unfortunate situation that good portfolio management is having little effect in boosting the share price due to unfavorable economic conditions.
Fresenius (Fresenius SECo), however, bucked the trend by 0.9 percent. Morgan Stanley and JPMorgan have commented positively on the shares of the hospital operator and medical technology company. Analysts at Morgan Stanley, for example, raised their price target and still see almost 15 percent upside potential for the stock. JPMorgan pointed to possible tailwind for the Helios hospital division due to new surcharges for hospitals and rising per-case flat rates due to inflation.
Ceconomy (Ceconomy St) will also be removed from the SDAX after the close of trading on October 15th and replaced by the shares of the specialty pharmaceutical company Medios. The reason is that the share of Mediamarkt-Saturn’s parent company, which is being taken over, that can be traded freely on the stock exchange has fallen below ten percent. Medios responded with an increase of 0.4 percent./ck/mis