On Thursday, Germany's esteemed blue-chip DAX index marked a notable increase of 0.37% as the earnings season progressed, despite a lack of significant economic news from Europe. This slight uptick demonstrates the continued interest and resilience of investors in the European market. Among the standout performers was Deutsche Telekom ($DTE), which witnessed a robust closing increase of 1.88%.
The telecommunications giant reported a year-over-year rise in net revenue for the first half of the fiscal year, attributing growth across all operational segments. However, it's worth noting that Deutsche Telekom experienced a decline in net profit in the first six months of 2024. This decrease was largely influenced by the previous year's figures that included a substantial gain from the deconsolidation of its tower business, GD Towers. Analysts from Bernstein commented, "The beat to consensus projections is a positive while unchanged guidance for growth in Germany (despite the new salary agreement) should reassure.
However, despite the significant beat in free cash flow (ie +16%), the upgrade to FY guidance is modest (ie less than 1%). Accordingly, we expect limited (positive) changes to consensus estimates." This outlook suggests cautious optimism for Deutsche Telekom’s performance amidst its ongoing adjustments. In another highlight, German insurance behemoth Allianz ($ALV) also contributed to the positive sentiment in the market, posting a gain of 1.89%.
The company reported higher attributable net income alongside an increase in insurance revenue for the six-month period ending June 30. Allianz remains on course to meet its ambitious full-year operating profit target of €14.8 billion, with a margin of ±€1 billion. Shifting focus to the U.S., recent data from the Department of Labor indicated a decrease in seasonally adjusted initial claims for unemployment benefits, falling to 233,000 in the week ending August 3, down from a revised 250,000 the week prior.
The consensus estimate for initial claims was around 240,000, reflecting a slight improvement in the U.S. job market amidst economic fluctuations. In summary, the DAX’s ascent on Thursday was bolstered by the encouraging earnings reports from major companies such as Deutsche Telekom and Allianz, painting a picture of resilience and gradual growth within key sectors of the European economy..