The DAX index has remained on edge this month as investors assess the recent Donald Trump election victory and the recent actions by the European Central Bank (ECB) and the Federal Reserve. The blue-chip index, which tracks the 40 biggest companies in Germany, was trading at €19,263, down from the year-to-date high of €19,662.

Trump election and tariff risks

The DAX index has moved sideways after Donald Trump’s victory, which could become a big challenge for German companies.

In his campaign, he promised to deliver substantial tariffs on goods imported from European countries like Germany, France, and Germany. Such tariffs will lead to retaliation from these countries, triggering a lengthy trade war.

Germany and the US have a close trading relationship. Data shows that the US exports goods worth over $70.9 billion to Germany, while the latter sold goods valued at over $153 billion. Some of the top German companies exporting to the US are Volkswagen, BMW, and Airbus. 

Still, there are chances that these companies will do well despite of tariffs. Besides, many of them have established substantial locations in the United States. For example, BMW employs over 11,000 employees in the US, while Volkswagen has 10,000.

Federal Reserve and European Central Bank

The DAX index has also reacted to the recent actions by the Federal Reserve and the European Central Banks (ECB).

In the US, the Federal Reserve has embarked on a gradual easing pace, cutting rates by 0.25% in the last meeting. It has now slashed rates by 0.75%, and officials point to more cuts going forward since inflation is on a path towards 2% and the labor market is deteriorating. Economists expect at least four rate cuts between now and December next year. 

The European Central Bank has been more dovish because of the deteriorating economy. Germany has remained in a recession, making it the worst-performing major economy this year. Worse, there are signs that the coalition government will collapse in the coming months.

The DAX index does well when the Fed and the ECB are slashing interest rates. Lower rates have historically been good news for stocks since investors move to them from government bonds. 

German automobiles in trouble

A closer look at the top DAX index constituents shows that automakers have been the worst performers this year. 

BMW shares have crashed by over 32% this year, while Porsche, Volkswagen, and Mercedes-Benz have plunged by 24%, 25%, and 16%, respectively.

These companies have plunged as the automobile industry slows, their electric vehicle brands implode, and as competition from Chinese brands intensifies. Most of them have a presence in China, a country whose growth has been slowing.

Other top laggards in the DAX index this year are companies like Bayer, Continental, Deutsche Post, Infineon, Brenntag, Sartorius, and RWE.

On the other hand, the DAX index has had some winners in the past few months. Siemens Energy, which nearly collapsed last year, has surged by 285% in 2024, making it the best-performing company in the index. 

Zalando shares have soared by 27%, while Rheinmetall, SAP, and Munich Re have soared by over 97%, 58%, and 25%, respectively. Other notable gainers were Deutsche Telekom, Commerzbank, and Deutsche Bank. 

DAX index analysis

The weekly chart shows that the DAX index has been in a bullish trend in the past few years. Recently, however, it has pulled back in the last four consecutive weeks. It has also rising wedge pattern, a popular bearish sign in the market.

The Relative Strength Index (RSI) and the MACD indicators have formed a bearish divergence chart pattern. Therefore, the stock will likely have a bearish breakout in the coming months as the uptrend fades. If this happens, it could retreat to the 100-week moving average level of €17,100

The post DAX index could dive as shares of German automakers implode appeared first on Invezz

Warren Buffett’s Berkshire Hathaway revealed intriguing shifts in its investment strategy during the third quarter, adding new positions in Domino’s Pizza and Pool Corp. while trimming holdings in long-time favorites like Apple and Bank of America.

The latest SEC filing offers a glimpse into the evolving appetite of the Oracle of Omaha.

A slice of the pie: Berkshire’s new Domino’s investment

Berkshire’s newfound craving for Domino’s translated into a 1.28 million share stake worth approximately $549 million as of September 30th.

This investment suggests confidence in the pizza chain’s ability to navigate the current economic landscape, where value-oriented dining options are gaining traction.

Like other fast-food giants such as McDonald’s, Domino’s has been actively promoting deals to attract budget-conscious consumers, many of whom are foregoing pricier sit-down restaurants in favor of fast casual or delivery options.

Berkshire takes a dip with Pool Corp.

Beyond pizza, Berkshire also dipped its toes into the pool supply market, acquiring 404,000 shares of Pool Corp., a leading distributor of swimming pool supplies, valued at around $152 million as of September 30th.

While Pool Corp. noted “soft” demand for new pool construction last month, the company highlighted the resilience of non-discretionary repair and maintenance services for existing pools, a factor that may have attracted Berkshire’s interest.

Market reaction: Domino’s and Pool Corp. shares rise

News of Berkshire’s investments sent ripples through the after-hours market, with Domino’s shares rising 6.9% and Pool Corp. shares climbing 5.7%.

This positive response is a common phenomenon following Berkshire’s investment disclosures, often interpreted by investors as a “seal of approval” from the renowned value investor.

While embracing pizza and pool supplies, Berkshire continued its trend of accumulating cash.

The Omaha-based conglomerate’s cash and cash equivalents nearly doubled to a staggering $325.2 billion as of September 30th.

This cash accumulation coincides with a significant reduction in stock purchases and a halt in share buybacks for the first time since 2018.

In the third quarter alone, Berkshire sold $36.1 billion of stocks while purchasing only $1.5 billion.

For the year, stock sales totaled $133.2 billion—primarily Apple, followed by Bank of America—compared to just $5.8 billion in purchases.

While Buffett remains tight-lipped about the precise reasons behind these strategic shifts, several factors may be at play.

Market observers speculate that tax considerations and potentially inflated valuations are influencing his decisions.

The substantial cash reserves provide Berkshire, with its $1.01 trillion market capitalization, the flexibility to make significant acquisitions under Buffett’s continued leadership at the age of 94.

Portfolio adjustments: a glimpse into Berkshire’s Holdings

Beyond the headline-grabbing Domino’s and Pool Corp. investments, Berkshire’s latest filing reveals other notable portfolio adjustments.

The conglomerate increased its stake in aircraft parts maker Heico while completely divesting its holdings in flooring retailer Floor & Decor.

Berkshire also trimmed positions in Capital One, Charter Communications, Brazilian digital bank Nu Holdings, and cosmetics chain Ulta Beauty.

The near-complete sale of Ulta Beauty shares, just a short time after disclosing an initial investment in August, represents a particularly rapid turnaround.

Ulta shares fell 3.8% after hours.

Berkshire’s vast portfolio continues to encompass a diverse range of businesses, including Geico car insurance, BNSF railroad, and various consumer, energy, industrial, and retail companies.

Thursday’s filing does not say whether Buffett or his portfolio managers Todd Combs and Ted Weschler are responsible for individual investments.

Neither Domino’s nor Pool have issued a statement or released any comments on the matter.

The post Warren Buffett’s craving for Domino’s: is pizza the new apple? appeared first on Invezz

China’s economy displayed promising signs of recovery in October, supported by an uptick in retail sales and industrial output.

These improvements reflect the impact of recent government stimulus measures aimed at revitalizing growth in key sectors.

According to the National Bureau of Statistics, retail sales grew by 4.8% from the previous year, marking the fastest pace since February and surpassing analysts’ expectations.

This is a critical indication of recovery in consumer spending, which had lagged behind production growth amid economic uncertainties.

Industrial output rose 5.3%, lower than forecast. However, Chinese steel production saw a notable recovery in October, ending four months of consecutive declines.

Retail sales growth attributed to stimulus measures

The increase in retail sales can be attributed to Beijing’s comprehensive stimulus strategies, which have included subsidizing the purchase of equipment, appliances, and vehicles.

This push to stimulate consumption helped home appliance sales skyrocket by 39% compared to the same period last year—the most significant growth seen since 2010.

The improved sales figures signal a resurgence in domestic consumer activity, an area that has been a weak link in China’s post-pandemic economic recovery.

Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd., said in a Bloomberg report, “The policymakers will be pleased to see the rally in retail sales. They’d rather sacrifice a bit of factory activity for consumption, although it is still early to tell whether the two-speed economy has ended.”

Industrial sector shows improvement

In addition to retail, industrial output rose by 5.3% in October, though it came in slightly below forecasts.

The growth signals stabilization in the manufacturing sector, buoyed by healthy margins that encouraged increased steel production.

Steel output, which had been declining for four consecutive months, rebounded by 6.2% compared to September, reaching 81.88 million tons.

This marked a 2.9% year-over-year increase, underscoring a positive shift in sentiment following state-led efforts to stimulate economic momentum.

The rebound has allowed the cumulative decline in steel production for the first ten months of the year to narrow to 3%, maintaining the industry’s trajectory toward surpassing 1 billion tons of output for the fifth year running.

However, analysts remain cautious about long-term prospects as some mills continue to face financial difficulties, and demand from the property sector—a traditional driver of steel consumption—remains subdued.

Recovery encouraging, but don’t celebrate yet

Despite these signs of recovery, Beijing faces challenges in sustaining growth, especially with weak domestic demand and an uncertain global landscape.

The National Bureau of Statistics noted, “We should be aware that the external environment is increasingly complicated and severe, effective demands are still weak at home and the foundation for continuous economic recovery needs to be strengthened.”

Further compounding concerns is the recent re-election of Donald Trump as US president, which could usher in more aggressive trade policies.

Trump has already threatened to impose a 60% tariff on most Chinese imports, posing a potential risk to China’s export-driven industries.

This could put added pressure on Beijing to enhance domestic consumption as a counterbalance to potential export setbacks.

Steel’s long-term outlook remains grim

Although October’s industrial recovery points to short-term gains, the steel industry’s long-term outlook remains precarious.

The China Iron and Steel Association has urged steelmakers to maintain production discipline despite rising prices, cautioning that structural market issues persist.

While government officials have indicated there is room for additional stimulus measures in the coming year, analysts believe these efforts might not be enough to revive demand from sectors like property development and large-scale infrastructure—key pillars that have historically fueled steel production.

Beijing’s ongoing commitment to policies that stimulate growth, such as consumer subsidies and targeted fiscal measures, will be critical to ensuring that the economic recovery is robust and sustainable.

The current signs of improvement are encouraging, but the path forward will likely require continued vigilance and strategic policy adjustments.

The post Is China’s stimulus package finally working? Retail sales and industrial output grow appeared first on Invezz

Ford Motor Co. has been hit with a substantial $165 million penalty by the US government for its handling of a rearview camera recall.

The National Highway Traffic Safety Administration (NHTSA) levied the fine, the second-largest in its history, citing Ford’s delayed recall and failure to provide accurate information.

The NHTSA criticized Ford for its sluggish response to the faulty rearview camera issue, affecting over 620,000 vehicles in the US and more than 700,000 in North America.

The agency also faulted the automaker for providing incomplete information, a violation of the Federal Motor Vehicle Safety Act.

“Timely and accurate recalls are critical to keeping everyone safe on our roads,” emphasized NHTSA Deputy Administrator Sophie Shulman.

“When manufacturers fail to prioritize the safety of the American public and meet their obligations under federal law, NHTSA will hold them accountable.”

The terms of the consent order: oversight and improvements

Under the consent order, Ford will pay $65 million directly and invest $45 million in enhancing its recall compliance processes.

An additional $55 million is deferred.

The agreement also mandates independent oversight of Ford’s recall performance for at least three years, requiring the automaker’s full cooperation with the appointed monitor.

Ford is obligated to review all recalls from the past three years to ensure adequacy and issue new recalls if necessary.

The company must also revamp its recall decision-making process, including data analysis methods for identifying safety defects, and invest in technology to track parts by vehicle identification number.

Ford has committed to investing the $45 million in advanced data analytics, a new document management system, and a new testing laboratory.

Ford’s response: a commitment to continuous improvement

“We appreciate the opportunity to resolve this matter with NHTSA and remain committed to continuously improving safety,” Ford said in a statement.

The automaker acknowledged the need for improvements and expressed a willingness to work with the NHTSA and the independent monitor to implement enhancements.

The company says it has learned from the camera recall.

“We look forward to working with NHTSA and the independent third party to implement further enhancements,” Ford said.

A history of camera troubles

The initial recall for the faulty rearview cameras occurred in September 2020, covering several 2020 models, including the popular F-Series pickup truck.

NHTSA documents reveal that Ford had identified warranty claims related to the cameras between February and April 2020, with the issue brought before a Ford committee in May.

The NHTSA contacted Ford about camera complaints in July 2020.

During an August 2020 meeting, Ford presented data showing high camera failure rates across several 2020 models.

Subsequently, Ford issued two additional recalls in 2022 and 2024 for the same camera problem, adding approximately 24,000 vehicles to the initial recall.

Ongoing scrutiny of Ford’s recall practices

The $165 million penalty doesn’t mark the end of Ford’s challenges with the NHTSA.

Earlier this year, the agency launched an investigation into a recall repair for Ford SUVs related to gasoline leaks and potential engine fires.

In an April 25th letter to Ford, investigators expressed “significant safety concerns” about the March 8th recall of nearly 43,000 Bronco Sport and Escape SUVs.

Ford’s proposed fix involved adding a drain tube to divert leaking gasoline and implementing software to cut off fuel supply upon leak detection.

However, the NHTSA’s Office of Defects Investigation believes this remedy fails to address the root cause and doesn’t proactively replace defective fuel injectors.

While Ford maintains it has a strong recall process and is committed to legal compliance, the company acknowledges the need for continuous improvement.

Ford said that it has a strong recall process and is committed to complying with the law, but it can always improve.

The post Ford’s $165 million safety lapse that affected 620K vehicles appeared first on Invezz

The CAC 40 index has moved into a technical correction after crashing by over 11% from its highest level this year. It has retreated to €7,200, down by 11.50% from the year-to-date high of €8,260. It is also hovering near its lowest level since August 12. 

CAC, which tracks the biggest companies in France, has underperformed its global peers as the Nasdaq 100, S&P 500, and Dow Jones have surged to their record highs.

China’s exposure to blame

The most important reason why the CAC 40 index has underperformed its American peers because of its exposure to China.

Indeed, the top laggards in the index are those with a substantial presence in the second-biggest economy globally. 

LVMH, the biggest luxury brand company in the world, has dropped by over 34% from its highest level this year as demand from Chinese shoppers wanes. It has moved to its lowest level since October 2022. 

Kering, the parent company of Gucci, has been the second-worst-performing luxury brand this year after Burberry. Its stock has dropped to €220, a 70% drop from the highest level in 2021. It is hovering near its lowest level since 2017 after reporting weak sales and delivering several profit warnings.

Kering’s revenue dropped by 15% in the third quarter to €3.7 billion, with Gucci’s sales falling by 26% to €1.64 billion.

L’Oreal, one of the top sellers of beauty products, has also been in a deep sell-off because of its exposure to the Chinese market. Its stock is down by 27% this year, a trend that could continue after it reported weak financial results. The most recent results showed that L’Oreal’s revenues jumped by 6% to €32.4 billion as its Chinese business slowed.

Pernod Ricard, another top French giant, has plunged by over 30% this year as sales of its popular brands dropped. 

The other top laggards in the index are STMicroelectronics, Vinci, Dassault Systemes, and Eurofins Scientific, which have all crashed by over 20%.

On the other top gainers in the CAC 40 index are companies are firms like Schneider Electric, Saint Gobain, EssilorLuxottica, AXA, and Danone have all jumped by over 15% this year.

European Central Bank and Fed decisions

The CAC 40 index has underperformed as concerns about Donald Trump’s tariffs continued. He has promised to implement tariffs on most imports, including friendly nations like France and those in the European Union.

The trade volume between the two countries has risen by 32% to over $153.8 billion. Tariffs would have an impact on the trade relations between the two countries and hit top companies. 

Meanwhile, the Federal Reserve and the European Central Bank have continued to slash interest rates in the past few months. The Fed and the ECB have slashed rates by 0.75% and they will continue doing that in the coming months.

CAC 40 index analysis

CAC 40 chart by TradingView

The CAC 40 index has been in a strong downward trend in the past few months after peaking at €8,263, where it formed a double-top pattern. It dropped to a low of €7,310, its lowest level since August 14.

The index has remained below the 50-day and 200-day Exponential Moving Averages (EMA). Similarly, the Relative Strength Index (RSI) and the MACD indicators have all pointed downwards, pointing to more selling pressure.

Therefore, the index will likely continue falling as sellers target the psychological level at €7,000, its lowest level on August 5.  This view will become invalid if the index rises above the key resistance at €7,792.

The post Here are the best and worst CAC 40 index companies of 2024 appeared first on Invezz