German equities concluded Tuesday with a slight uptick, reflecting a minor gain against the backdrop of ongoing challenges within the construction sector, both domestically and across the eurozone. At market close, the prominent DAX index showed a modest increase of 0.09%. According to the latest indices compiled by S&P Global, which highlight the T HCOB PMI survey results, the German construction sector continues to struggle despite a slight uptick in activity experienced in July.
The HCOB Germany Construction PMI Total Activity Index demonstrated a marginal increase to 40, up from 39.7 the previous month. Industry experts emphasize the seriousness of the situation. "Overall, the construction sector is still having a rough time. Construction companies lost even more orders in July than in June, and expectations were the most pessimistic for four months.
Approximately 41% of professionals in the field anticipate a reduction in projects for the upcoming year, while a mere 9% hold an optimistic view towards growth. This sentiment is hardly surprising, particularly given that building permits for residential projects saw a dramatic decline of nearly 25% in May compared to the same period last year," commented Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.
The plight of the construction industry is mirrored in the broader eurozone, where July's data revealed an even steeper deterioration. The HCOB Eurozone Construction PMI Total Activity Index fell to 41.4, down from 41.8 recorded in June, marking a faster contraction rate primarily driven by a significant decline in housing activity throughout the region.
From a corporate perspective, Bayer ($BAYN) faced notable losses, ending the day down 6.05% after the German biopharmaceutical giant reported a ‘modest performance’ amid a tough market landscape during the first half of the year. The stock recorded the steepest decline among constituents of the blue-chip index.
Zalando ($ZAL) also struggled, retreating 1.91% as Bernstain has classified the German online retailer as underperforming, stating that projections for the company's fiscal 2025 performance must be significantly adjusted downwards. This follows Zalando's recent report indicating an increase in net income and revenue for the first half, while maintaining its guidance for the entirety of 2024.
In conclusion, the ongoing downturn in the construction sector signifies broader economic uncertainties, impacting major corporations' stock performances and underscoring the need for strategic adjustments in operational outlook and market engagement..