European stocks pulled back on Monday ahead of huge corporate earnings reports later in the week. Germany’s DAX index slipped after a decline in Germany’s Ifo Business Climate Index for July. UK’s FTSE 100 index as well as French CAC 40 index fell. Euro STOXX 50 index also inched lower.
German Economic Outlook
The DAX index started the week lower after the release of the German Ifo Business Climate Index for July. The index came in at 100.8 which was lower than the estimated 102.1. It also fell from the previous 101.7 in June.
According to the President of the Ifo Institute, the index in manufacturing fell due to a decrease in optimism in companies’ expectations. However, companies’ assessments of the current situation were hovering near their highest level since August 2018.
The business climate in the service sector, as well as trade, deteriorated. However, the business climate in construction improved.
The Delta coronavirus variant fears are still hovering over the markets. The surging cases of the virus have seen many countries go into lockdown. Investors are worried that this would lead to a slowdown in economic recovery.
Investors are looking ahead to the Fed’s two-day policy meeting starting on Tuesday. The Federal Reserve is expected to release its interest rate decision on Wednesday. The Federal Open Market Committee will also release its monetary policy statement on the same day.
DAX Index Movers
Deutsche Wohnen was the best performer in the DAX index. The real estate company gained more than 1.33% in its stock earnings. This was after Vonovia’s $22 billion offer to the company failed.
Siemens Energy AG was also among the top performers in the index. Goldman Sachs recently maintained their buy rating for Siemens Energy.
On the flipside, Vonovia led the laggards in the index. The real estate company fell by more than 2.88% after its $22 billion offer to Deutsche Wohnen collapsed.
Continental AG also declined on Monday. Continental AG is an automotive parts manufacturing company. The company lost more than 2.15% in its stock earnings.
Volkswagen VZO was also among the drags in the index. The company manufactures and sells automobiles globally. The company’s stock price fell 1.66%.