European stock indices began trading in the new year with gains, although the scale of those gains has largely been erased. The DAX is now up 0.2% on an intraday basis while the UK’s FTSE100 is gaining 0.3%. On the other hand, however, the French CAC40 is doing very poorly, losing 0.5% amid declines in the valuations of major fashion companies. In the afternoon, investors will learn PMI data from the US. 

Volatility currently seen in the broader European market. Source: xStation

Germany’s DE40 index halted declines near an important support zone defined by the broken historical peak of October this year. Moreover, this zone is oscillating around the 50-day EMA (blue curve on the chart). In the medium term, it is the reaction to these two zones that may determine whether the DE40 will maintain its overall upward trend. The most important support zone remains the historical peak at 20,500 points.   Source: xStation

News

Deteriorating sentiment in China, fueled by a lower-than-expected reading of Caixin PMI manufacturing data triggered a pullback in today’s session in the luxury goods market, which is heavily dependent on the state of the Chinese economy.

The decline in the broader market underscores investors’ concerns about economic adversity, despite President Xi Jinping’s promise to implement proactive growth policies. Weak manufacturing data and concerns about escalating trade tensions between the U.S. and China worsened sentiment, with export orders contracting for the fourth time in five months.

Shares of LVMH (MC.FR), Hermes (RMS.FR) and Kering (KER.FR) are losing 2.2%, 1.4% and 3.5%, respectively, in today’s session. Source: xStation 

For the same reason, weak sentiment is observed in the automotive market. The German giants of the industry, under pressure from the dynamic growth of the EV sector, which until recently was one of the mainstays of the new European order, and the weakening demand of the wealthy Chinese are heavily dependent on sentiment in this market. 

Chinese sales account for 30% and 45% of German manufacturers’ pre-tax profits in 2024.

Source: xStation