• European equity markets have started the day a bit higher, IBEX (SPA35 on xStation5) plunges ahead of the Catalan referendum
  • DAX (DE30) gains in the morning, a further increase might be disrupted by the EURUSD though
  • Volkswagen (VOW.DE) declines after car maker sets aside $3 billion for diesel engine buyback

Although, the European stock markets have opened higher, the Spanish index (SPA35) has plunged at the opening as investors are taking out their money ahead of the Catalan referendum scheduled on Sunday. We sketched out our insight into this event earlier this week you can find it under this link. Right now let’s take a closer look into the German DE30.

link do file download linkThe DE30 keeps on climbing after breaking out of a crucial support zone at around 12656 points. Source: xStation5

The price managed to close above a relevant support area yesterday, hence a continuation of the ongoing leg higher could be on the cards. All the same, a jump from the morning has been erased a bit when the euro has marked a surge above 1.18. Thus, in the short-term one could take notice of such a relationship, on the other hand investors who have been already daunted on the Spanish SPA35 might visit the German stock exchange.

That said, if the DE30 is able to move higher bulls could aim at 12850 points as their the nearest target to tick. Nevertheless, a corrective move towards the broken support zone ought to be considered as well. If so, it would be a decent opportunity to join the bull market in the medium-term.

link do file download linkVolkswagen is by far the worst performer within the DE30 following an unpleasant report. Source: Bloomberg

At first, let’s have a quick look at the Asian indices which registered quite a rosy session marking broad-based gains. The Hang Seng (HKComp) picked up 0.5%, the Shanghai Composite (CHNComp) closed higher 0.3%, the Australian S&P/ASX 200 (AUS200) edged up 0.2% while the Japanese NIKKEI (JAP225) was flat on the day.

In Europe, the Spanish SPA35 is stacking up badly against its major peers across the old continent. It’s moving lower 0.45% continuing its decline begun on Thursday. Otherwise, the DE30 is gaining 0.2%, the CAC40 (FRA40) is losing 0.1%, the EuroStoxx50 (EU50) is trading flat whilst the British FTSE100 (UK100) is growing 0.4%. Notice, the UK100 has been decisively on the back foot of late. 

Company news

Shares of Volkswagen (VOW.DE) are trading down as much as 3% following a report that the German car maker will set aside $3 billion in order to cover a diesel engine buyback program in the United States. The amount will be deducted from the company’s third quarter earnings which will be released on 27 October.

Additionally, Merck (MRK.DE) is losing more than 1% as well despite quite a supportive article provided by Bloomberg Intelligence. The report underlines that after seasonal softness in key categories in Q2, global consumer health companies could return to healthy growth of about 3% by the year end.