- Auto stocks slumped amid allegations of collusion
- European indices were lower as the scandal weigh
- Macroeconomic data failed to support stocks
German stocks were lower on Monday as auto stocks slumped amid allegations of collusion. The Auto sector was under pressure after reports that the European Commission is investigating collusion between German carmakers. Volkswagen fell nearly 3 percent, Daimler was 2.5 percent down and in Paris, Peugeot dropped 2.3 percent. The European Commission said it received information on alleged collusion but it is still assessing the information. The probe could damage the sector’s reputation further following the diesel emissions scandal.
Banking and retail stocks were slightly higher in early trade as investors expect further monetary policy tightening in the U.S. later this week and digest possible merger news.
Automakers were among biggest lossers while banking stocks held firm. source: Bloomberg
Der Spiegel magazine reported in its Saturday edition that Volkswagen admitted to cartel-like behaviour in admissions as part of investigations into its own cars’ manipulated diesel engines and software. According to the reports, secret meetings were held between managers of VW and its competitors BMW and Daimler. These talks included representatives of VW’s luxury brand Audi as well as Porsche, once a luxury competitor and now part of the VW group.
As for the politics and data, president Donald Trump said Sunday he is willing to sign new sanctions against Russia. However, in Europe, the European Commission’s President Jean-Claude Juncker warned that there will be retaliations on the U.S. if it pushes sanctions affecting European companies. Meanwhile, in terms of data, there will be new flash manufacturing PMIs in Germany and the euro zone. In Germany, the figures showed a slowdown in economic activity. IHS Markit’s purchasing managers’ survey dropped slightly to 55.1 from 56.3.
DAX fell to the lowest level in weeks. A break below 12300 opens a way towards 12000.