German stocks fall after Daimler issues profit warning

European stocks declined today as carmakers stocks declined following a profit warning by Daimler, the owner of Mercedes Benz. The company said that this quarter’s results will be hit by troubles with diesel vehicles in its Mercedes-Benz brand. It also downgraded its full-year earnings. It announced that it expects its yearly earnings to be in line with last year’s performance of $11.1 billion. This will be lower than the previously-guided estimate of $12.6 billion. In response, its stock lost 3.5% of its value while the automakers index declined by 0.2%. DAX declined by 0.60%.

In Germany, the morale among business leaders has continued to decline, lowering the sentiment of Europe’s biggest economy. According to Ifo Institute, the business climate index declined to 97.4, which was lower than the previous 97.9. This was the fourth straight month of decline and the lowest level since 2014. The current situation improved slightly at 100.8 from the previous 100.7.  June expectations were at 94.2, which was lower than 95.2 a month earlier. The region’s biggest economy has been weakening as the region has been caught up in the ongoing trade war.

In the United States, stocks futures continued to rally today. This was a continuation of the trend that started last week when the Fed sounded dovish after leaving rates unchanged. Most FOMC officials believe that a rate cut will come later this year if the economy continues the ongoing trend. Investors were also excited about the increased deal making after Eldorado Resorts announced that it was acquiring Caesars Entertainment in a deal valued at more than $8 billion.

Meanwhile, the price of crude oil rose today as the Trump administration announced its plans of adding more sanctions on Iran. The sanctions come less than a week after Iran shot down a US spy drone. Iranians believe that Donald Trump is so averse to a US-Iran war that he will slow the pace of sanctions and compromise on the US demands to the country.

GER30

Germany’s DAX index declined today after the profit warning by Daimler. The index reached a low of €12,245, which was the lowest level since Friday, when it reached a high of €12,439. On the hourly chart, the pair is trading below the 50-day and 25-day moving averages while the RSI has moved from a high of above 70 to the current low of 37. On the hourly chart below, the price is slightly below the 61.8% Fibonacci Retracement level. The pair will likely continue moving lower to test the important support of €12,120.

EUR/USD

The EUR/USD pair continued the sharp rally started on June 18, when the pair reached a low of 1.1180. Today, the pair reached a high of 1.1395, which was the highest level since March 19. On the four-hour chart, the price is along the upper line of the Bollinger Bands and above all the short and medium-term moving averages. The RSI is at the 79 level, which is above the overbought level. While the pair could continue moving higher, there is a likelihood that there will be pullbacks as bulls take profits.

USD/CHF

The USD/CHF started a major sell-off on June 19, when it reached a high of 1.0015. Today, the pair continued the downward trend and reached a low of 0.9745, which was the lowest level since January 10. On the four-hour chart, the pair is below the 25-day and 50-day moving averages while the RSI is at the oversold low of 20. The price is also at the lower line of the Bollinger Bands. The price could continue moving lower to test the important support of 0.9700.

 



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