DAX index stalls as SAP share price sinks: key earnings ahead

July 21, 2023 11:19 AM BST | By Invezz
 DAX index stalls as SAP share price sinks: key earnings ahead
Image source: Invezz

German stocks pulled back on Friday as market participants focused on the ongoing corporate earnings season. The DAX index, which tracks the 40 biggest companies in Germany, dropped by 50 basis points. This made it one of the worst-performing European indices.

SAP share price sinks

The biggest laggard in the DAX index was SAP, the biggest technology company in Germany. Its stock plunged by more than 4% in Germany while its American ADR fell by 6% on Thursday.

SAP shares dropped after the company published weak quarterly results and lowered its forward guidance. Its revenue came in at €7.55 billion in the second quarter, helped by strong uptake of its cloud solutions. 

SAP decided to lower its guidance for 2022. It expects that its cloud revenue will be between €14 billion and €14.2 billion. That was lower than the previous guidance of between €14 billion and €14.4 billion.

SAP is not the only tech firm to lower its forward guidance signaling that companies are cautious about their spending. As I wrote here, Infosys, the giant Indian outsourcer, lowered its guidance for the year.

The other top laggards in the DAX index were Bayer, Sartorius, Deutsche Post, Symrise, and Deutsche Telekom. These losses were offset by the strong performance of Zalando, Deutsche Bank, Munich Re, BMW, and Commerzbank.

The next catalyst for the DAX index will be upcoming corporate earnings from American and German companies. Some of the top constituents that will publish their results next week will be Deutsche Boerse, Deutsche Bank, MTU Aero, and Volkswagen among others. It will also react to the latest big tech results like Microsoft and Google.

DAX index forecast

DAX index

The German DAX 40 index has moved sideways in the past few weeks. In this article, I wrote that the index has found a strong resistance at €16,347, the highest point this year. It is still being supported by the 50-day and 100-day moving averages, which is a positive sign

Therefore, the outlook of the index is neutral for now. More upside will be confirmed if it moves above the resistance level at €16,347. A move below the 50-day moving average will signal that bears have prevailed.

The post DAX index stalls as SAP share price sinks: key earnings ahead appeared first on Invezz.


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