Three risks for autos: China, destocking and tariffs
Stoxx 600 down 0.1%, U.S. futures up around 0.2%
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THREE RISKS FOR AUTOS: CHINA, DESTOCKING AND TARIFFS
After a strong start to the year that made European autos the best performers across the STOXX, the sector has relentlessly lost ground during the second quarter and now languishes near 6-month lows, down almost 5% since early June.
Whether all the bad news is in the price is the key question for investors. The sell-side appears to be converging around the view that the road remains uphill.
Last week, Citi said there is no obvious positive catalyst ahead, and today HSBC is also sounding pretty cautious on the space.
Analyst at the UK bank say they don't expect a "calamitous" Q2 but believe it's too early to call the trough as earnings downgrades should continue. They see three main risks:
China pricing
Further destocking
Tariff retaliation
"Arguably, 2024 is evolving as the carmakers suggested – a weak start, but improving as the year unfolds. The catch is the improvement appears to be less than consensus expected, so we are seeing widespread downgrades to estimates," writes Michael Tyndall, head of European automotive equity research at HSBC.
(Danilo Masoni)
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