Dow Jones Decline Halts DAX Recovery in German Stock Market

The German stock market, represented by the DAX index, traded lower on April 25, 2024, as a disappointing earnings report from Meta Platforms (Facebook's parent company) led to caution ahead of earnings results from major U.S. tech and growth companies. The Dow Jones Industrial Average futures fell 207 points or 0.5%, with Meta's stock plunging 12% in premarket trading after the company issued light revenue guidance for the second quarter.

International Business Machines (IBM) also fell 8% after missing consensus estimates for first-quarter revenue. Traders will be watching for the first-quarter U.S. GDP reading and weekly jobless claims data, which will inform the Federal Reserve's interest rate policy. Despite the Dow's decline, some companies like Honeywell and Merck reported better-than-expected earnings, and Chipotle Mexican Grill's stock jumped 3.2% on a strong quarterly print.

Meanwhile, German consumer confidence is set to rise again in May, with the forward-looking consumer sentiment index reaching a two-year high, though it remains at an extremely low level. Additionally, sentiment among Germany's exporters weakened in April after a strong rebound in the previous month due to sluggish demand.

Despite these market conditions, Deutsche Bank posted better-than-expected profit growth in the first quarter, while online takeaway food company Delivery Hero and food delivery company HelloFresh reported strong results and maintained their outlook for the fiscal year 2024.

Why this matters: The performance of the U.S. stock market, particularly the Dow Jones, has a significant impact on global markets, including Germany's DAX index. The disappointing earnings from Meta Platforms and IBM, along with the anticipation of further tech company results, have dampened the recent recovery in the German stock market.

The near-term trends for the DAX will depend on ECB commentary, corporate earnings, U.S. GDP numbers, and economic indicators from Germany and the U.S. World shares were trading mixed, with France's CAC 40 losing 0.3%, Germany's DAX dipping 0.4%, and Britain's FTSE 100 rising 0.7%. U.S. shares were set to drift lower, with the Dow future down 0.3% and the S&P 500 future declining 0.5%. Investors are awaiting a flood of global earnings reports, including updates from U.S. tech companies known as the 'Magnificent Seven'.

Key Takeaways

• German DAX fell due to disappointing Meta, IBM earnings; U.S. tech earnings eyed
• German consumer confidence to rise, but exporter sentiment weakened in April
• Deutsche Bank, Delivery Hero, HelloFresh reported strong Q1 results
• U.S. stock futures fell ahead of GDP data, weekly jobless claims
• Global markets trading mixed; investors await earnings from 'Magnificent Seven' tech firms