Stock price of Dax plummets in response to SAP's report
In a day marked by economic uncertainty and the release of corporate earnings, European stock markets closed lower on Wednesday, with the Deutsche Borse's Dax 40 index dropping by 1.1%.
The trade dispute between the US and EU, with an anticipated resolution expected by August, cast a shadow over the markets, causing a ripple of apprehension. The Dax closed at 24,042 points, reflecting the day's overall downward trend.
One of the day's notable performers was the German defence technology company, Rheinmetall. Despite significant gains made by investors earlier this year, Rheinmetall continued to weaken, finishing the day 3.3% lower at 1,756 euros. The decline may be attributed to expectations of increased defence spending and NATO rearmament cycles, which have been met with a positive response from analysts such as JPMorgan and Kepler Cheuvreux, who have recommended overweight or buy ratings.
In the same vein, Renk, another German defence company, gained 0.9% to 70.95 euros in the MDax. Analysts at Deutsche Bank Research have raised their target price for Renk from 64 to 73 euros and recommended buying Renk, with a current Buy rating. This positive outlook is shared by other analysts, including Sven Kürten at DZ Bank, who recommends buying Munich Re stock with a target price of 640 euros.
However, not all companies saw positive gains. SMA Solar's interim results showed a significant drop in Ebit due to write-downs on inventory, causing the share price to drop by 0.5% to 20.10 euros in the afternoon. Similarly, Sartorius' half-year results disappointed, resulting in a 5.8% drop in the share price.
The tech sector also experienced a dip, with Infineon falling 3%. The sector's slump can be partly attributed to weaker European stock markets before the SAP results and US tech earnings, which may have contributed to a cautious approach by investors.
In the currency markets, gold prices continued to rise by 0.5% to $3,413 per troy ounce, while Brent oil prices fell by 1.3% to $68.30 per barrel.
Looking ahead, analysts at Berenberg predict the coming weeks to be more volatile, with the Euro Stoxx 50 falling 1.2%. The uncertainty surrounding the trade dispute between the US and EU, as well as the release of corporate earnings, is likely to continue shaping the market's trajectory in the near future.
Meanwhile, Sartorius preferred shares may drop out of the Dax 40 in September, signalling a potential shift in the market dynamics. As the dust settles from today's trading, investors will undoubtedly be keeping a close eye on these developments, poised for the next market swing.
The trade dispute between the US and EU, anticipated to be resolved by August, may provoke further apprehension in the finance industry, impacting future business decisions related to investing in the European market. Despite the overall downward trend, analysts remain optimistic about the outlook for companies like Renk and Munich Re, with their shares recommended for buying. However, Sartorius, a company in the technology sector, saw a significant drop in its share price due to disappointing half-year results.
