DAX 40 index slips as Siemens Energy share price plummets

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on Aug 7, 2023
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  • The DAX index has pulled back in the past few days.
  • The sell-off continued after the latest Siemens Energy earnings.
  • The company warned that its losses will jump to over €4.5 billion.

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The DAX 40 index came under intense pressure on Monday as concerns about Siemens Energy escalated. The index retreated by more than 30 basis points and reached a low of €15,912, which was much lower than last week’s high of €16,515.

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Siemens Energy woes continue

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The biggest catalyst for the DAX index drop was Siemens Energy, one of its biggest constituents. The company’s stock plunged by more than 4% after it delivered weak financial results. 

Siemens Energy shares dropped to €14.54, the lowest level since July 7th of this year. This decline added to woes that started in June when the shares plunged by over 37% in a single day.

The company warned that its loss will jump to over €4.5 billion this year because of its ailing wind business. It lost over €2.9 billion in the third quarter and also slashed its annual revenue guidance. 

Siemens Gamesa, its wind energy company, has been going through challenges as its 4. X and 5. X blades developed rotor blades and main bearings. In a statement, the CEO said:

“A rotor blade has more than 150 layers of glass fibres. We found that in the production process some of these layers had wrinkles and this can lead to irregularities.”

Therefore, there are concerns about the future of Siemens Energy as its market cap has dropped by over €6 billion in the past few months. It is now valued at over €11.98 billion. It also has over €53 billion in net debt.

The other top laggards in the DAX index were Commerzbank, Adidas, Sartorius, Deutsche Boerse, and Deutsche Post. On the other hand, the only gainers on Monday were Infineon, Bayer, Rheinmetall, and SAP. Elsewhere in Europe, the FTSE 100, CAC 40, and Stoxx 50 indices dropped by over 0.50%.

DAX 40 index forecast

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The DAX index rose to an all-time high of €16,564, as we wrote here. It then retreated last week after the Fitch credit rating downgrade. The index dropped below the 25-day and 50-day moving averages. It also moved slightly above the ascending trendline shown in green. 

The index has also formed an ascending triangle pattern, which is usually a bullish sign. Therefore, the bullish trend will likely continue in the coming weeks. If this happens, the next key resistance level to watch will be at €16,654. A drop below the support at €15,757 will invalidate the bullish view.

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