Warning Bells Sound for Europe’s Big Exporter
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Europe’s largest economy is attracting bad news as companies are entering the earnings season. While Germany’s DAX Index has managed to shrug off bad economic indicators and trade worries that had hit shares in May, yesterday’s profit warning from BASF was harder to ignore. And dividend futures indicate traders are pricing in payout cuts at companies such as BASF, Bayer and Lufthansa.
The DAX’s performance has broken away from macro fundamentals this year. Within the main European economies, Germany is the bottom country when it comes to manufacturing PMI, with data indicating a contraction since January. Yet, the equity benchmark has climbed near a one-year high and has entered a bull market again.