Downward Pressure on the European Automotive Sector

8月16日

• European Stock Exchange: EuroStoxx50 is up 0.4% at the open, and is considered to have failed to reach its optimal buy point of 4,400 points. Meanwhile, the IBEX35 has stagnated at 0.1%. European indices as a whole have advanced +2.5% since Monday.

• Debt market: The US 10-year bond is at 3.9% and the German 10-year bond is above 2.25%, while Spanish bonds are at 3.08%.

• Carry Trade: Traders have returned to the carry trade with the Japanese yen and the Bank of Japan's policies could influence the profitability of these operations.

• European Automotive Industry: The transition to electric vehicles and the entire GreenDeal faces several challenges in the sector related to high cost and lack of local infrastructure. The EV market share has contracted from 16% in 2015 to 13% in 2023, so it looks like a clear demand reduction trend. Additionally we can count on supply problems and competition with Chinese manufacturers are affecting European production. This is being reflected in the Stoxx Europe 600 Automobiles & Parts, which has fallen by 6% so far this year. In contrast, luxury brands such as Ferrari have increased their shares by 25%.

• Automobile Company Indices: European leaders in the sector are in EURO STOXX 50 and STOXX Europe 600 Automobiles & Parts.
- Ferrari (RACE): S&P 500, FTSE MIB.
- Renault (RNO) and Stellantis (STLA): CAC 40.
- BMW (BMW) and Mercedes-Benz (MBG): DAX.

• Outlook: The recovery of the European automotive industry could take a decade due to the current pressure, with factors complicating its recovery to pre-crisis levels.

Looking at the DAX chart, it has currently recovered almost +8% since August 5. This tells us that the Fed's policies are reflecting their effects on all European indices to a greater or lesser extent. But do not discount the risk of major automotive and industrial companies being affected by the commodity and technology wars with the East. At the moment, the index's support zone is at 17,419 points, with the current high at 18,913 points. At the moment the strongest trading zone is 18,479 points, slightly above the trading zone. RSI is slightly above the middle zone so it could be representing an increase of long positions in the index. If the index exceeds the 18,479 checkpoint zone, we will see a new attempt to pierce prices in the highs zone.
Ion Jauregui - Analyst ActivTrades






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