BMW said today, Tuesday, 2018 profits are likely to fall due to uncertainty from the escalating global trade war as well as the higher costs of implementing the new emissions standards in Europe. BMW stated (important in bold):
Recall that Daimler warned of similar consequences earlier this summer. In July Daimler blamed that the escalating trade war situation could affect its profits this year. Both Daimler and BMW have factories in the US, producing both for the US market as well as for exports outside of the US.
The stock is taking a beating today (-4.5%) and is currently trading below the big 80 level. Note the stock turned lower a few days ago when we saw it trade as high as 86.7. Shareholders are not happy seeing this rather brutal move lower. Volumes have skyrocketed (although Friday volumes were extra large due to option expiration).
The 1 month BMW at the money implied volatility is trading higher.
We can clearly see the German carmakers leading the laggards list today.
The BMW news is dragging the entire European Auto (SXAP) sector lower.The bigger negative trend is intact and the index just broke below the 50 day average again.
The mighty DAX trades right below the negative trend line since mid May. One comment from BMW won’t drag the entire DAX lower but watch this index carefully as the bounce has been rather violent from early September lows. 50 day average is right here.
Source: charts by Bloomberg
