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DAX Price Forecast: Uncertainty Over Global Economic Recovery Weighs on European Stocks

By:
James Hyerczyk
Updated: May 26, 2024, 13:13 GMT+00:00

European stocks fall for third day amid global economic uncertainty influenced by US data, mixed economic outlook.

DAX, CAC, FTSE

In this article:

Highlights

  • DAX falls 0.5% on weak consumer and industrial shares.
  • Volvo falls, Sodexo rises on spin-off, Nexans drops on stake cut.
  • Eurozone recovery picks up, mixed data and recession fears cloud global outlook.

Overview

On Wednesday, European shares fell amid concerns over the global economic outlook.

Germany’s DAX fell 0.5% driven by weakness in industrial and consumer discretionary shares. Similarly, France’s CAC 40 fell 0.4%. However, the U.K.’s FTSE 100 rose 0.4%, led by defensive and energy stocks.

The pan-European STOXX 600 index slipped 0.16%, with industrial goods and services dropping 2.1%. Limiting losses, utilities rose 1.6% and healthcare stocks rose 1.7%, both hitting their highest level since August 2022 amid growing economic uncertainty.

Euro Zone’s Uneven Recovery Amid Uncertain Global Outlook.

In terms of economic news, the Euro Zone’s recovery gained momentum last month, but the upturn was uneven across industries and countries.

The recovery was seen as stronger in some sectors than others. For example, in Germany, industrial orders rose more than expected in February, driven by strong growth in the vehicle construction sector.

However, despite the positives, the global economic outlook remained uncertain, contributing to the downbeat mood among investors.

Volvo, Sodexo, Nexans, UBS, and Telecom Italia Stocks See Significant Movement.

In individual stocks, there were some significant movements. Swedish truck maker Volvo AB fell by 11.8% to the bottom of Europe’s STOXX 600 on trading ex-dividend.

However, Sodexo rose by 11.3% as the French catering and food services group plans to spin off and list its Benefits & Rewards Services business in 2024.

Nexans fell by 7.1% after top shareholder Invexans Limited UK decreased its stake in the French cable company.

On the other hand, shares of UBS fell by 1.3% as the Swiss lender sought to assure investors that it can make its unexpected takeover of rival Credit Suisse work and pay off for its shareholders.

Italy’s Telecom Italia added 0.5% after Italian media reports that KKR aims at improving its offer on the network grid.

European Stock Markets Fall for Third Straight Session

Overall, European stock markets fell for a third straight session, with uncertainty over the global economic outlook at the fore.

The outlook is partly influenced by data out of the U.S., which suggested that the economy is slowing.

Markets are pricing in around a 59% chance that the Fed will hold interest rates steady in May, according to CME’s FedWatch tool. The mixed economic data and recession fears cloud the outlook for the region’s interest rates.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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