DAX Stocks drop ahead of Apple earnings

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 City Index. Please note this product may not be available to trade in all regions.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.