- Equity markets have begun flat in anticipation of the Federal Reserve
- DAX price action (DE30 on xStation5) remains strongly constrained
- Thyssenkrupp (TKA.DE) surges as the company strikes the deal with Tata Steel
The European stock markets seem to be cautious ahead of the Federal Reserve meeting. Although, there is no a possibility for a hike, some hints with regard to the balance sheet run-off could be worth looking at. That said, the dot-plot should be much more important as the main focus may be on December 2017 as investors scratching their head whether the FED is able to hike rates once again this year.
The DE30 is striving to break through its local resistance zone which could enable the price to go higher. Source: xStation5
Taking a look at a technical analysis, we can spot that the price is trying to break its local resistance area and if it manages to do so, it could open space for an increase towards 12600 points. Nevertheless, even though the DE30 breaks the above-mentioned resistance, it will have to struggle with an upper limit of an ascending channel which has been respected quite closely lately.
The German index could struggle to achieve higher levels as more hurdles lurk ahead. Source: xStation5
In turn, when we have a look at a daily time frame one could notice that the price might have to jump over some notable hurdles placed at around 12640 points and a bit higher. Thus, without a clear catalyst, for instance a more hawkish stance of the Federal Reserve, buyers may find it hard to get the price higher. On the other hand, once the price moves through a lower boundary of a channel, it could reignite hopes for sellers to see the declining price. Under such a scenario, a swing even toward 12320 could be on the cards.
Thyssenkrupp (TKA.DE) is by far the best performer within the DE30. Source: Bloomberg
The Asian session was quite benign with the Hang Seng (HKComp) being the top mover and gaining as much as 0.5%. Moreover, the Shaghai Composite went up 0.3%, the NIKKEI (JAP225) managed to add a mere 0.05% while the Australian S&P/ASX 200 slipped almost 0.1%.
In Europe, moods are rather balanced as swings hasn’t exceeded 0.1% thus far. To be precise, the DE30 is gaining 0.05%, the French CAC40 (FRA40) is rising 0.1%, the EuroStoxx50 (EU50) is trading flat while the FTSE100 (UK100) in London is rising just 0.05%.
Having looked at the breakdown of the DE30 one could notice that Thyssenkrupp (TKA.DE) is decisively the best stock which is a ramification of the deal with Tata Steel. After a merger the group will be the region’s second-largest producer. The stock is trading right now 3% higher, though more than a 5% gain has been seen in pre-market trading.
On top of that, Deutsche Telekom (DTE.DE) has already marked a decent profit following the recommendation from Kepler. The stock was was upgraded to buy from hold, albeit the price target was lowered from 19 EUR to 17.5 EUR still implying 12.2% upside from the last close.