DAX: Stocks drop ahead of Apple earnings
Fawad Razaqzada July 30, 2019 1:04 PM
The sell-off is a combination of renewed US-China trade concerns, pre-Fed caution, European earnings disappointment (e.g. Lufthansa) and ongoing worries about the health of the Eurozone economy all weighing on sentiment, particularly on mainland European markets.
Stocks have fallen sharply in Europe with the DAX taking a plunge this morning and US index futures also weakening ahead of Apple’s earnings results tonight. The sell-off is a combination of renewed US-China trade concerns, pre-Fed caution, European earnings disappointment (e.g. Lufthansa) and ongoing worries about the health of the Eurozone economy all weighing on sentiment, particularly on mainland European markets.
Investors are wondering whether the Fed’s expected 25 basis rate cut would be enough to keep the markets supported given that some people have been calling for a deeper rate cut at this meeting. This comes on the back of disappointment that Mario Draghi, the European Central Bank President, was not as dovish as the market had expected last week.
In addition, US President Donald Trump has raised concerns the US-China trade talks could be stalling again. In a tweet, he said that the “problem with China [is that] they just don't come through" and "always changes the deal to their benefit." This doesn’t bode well for the US-China trade talks which will resume tomorrow.
But could Apple come to the rescue? As my colleague Ken Odeluga will write in his preview later, “a solid Q2 sets Apple up for a turnaround year, especially with worst-case trade risks fading.” Sales are forecast to be flat at $53.35bn, which would be an improvement on the 5% fall of Q2. EPS is seen 8.9% lower on the year at $2.10. If Apple beats, then we could see the indices stage a bit of a recovery tonight.
Today’s sell-off has pushed the DAX down to the bullish trend line around 12140ish. This level needs to hold for the bulls to maintain control. However, a potential closing break below here could pave the way for further losses in the days ahead.
Source: Trading View and FOREX.com. Please note this product may not be available to trade in all regions.
Disclaimer: GAIN Capital UK Limited (trading as "Forex.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, Forex.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by Forex.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although Forex.com is not specifically prevented from dealing before providing this material, Forex.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
For further details see our full non-independent research disclaimer and quarterly summary.