- European stocks start lower as EUR keeps on rising
- DAX (DE30 on xStation5) failed to break a crucial resistance
- Commerzbank (CBK.DE) is the largest drag on the index
The European equity markets have kicked off the day with losses which began yesterday after the ECB’s press conference along with an expansion of the probe into Trump’s business transactions. Although, governor Draghi did not deliver too many hints regarding a possible act as soon as September, a lack of denial was treated as if all options remain on the table, hence a possibility that the ECB will begin winding down its balance sheet is still alive.
The DE30 stays within a triangle formation, the price has been able to rebound from a local support which could foretell a continuation of a bounce. Source: xStation5
Taking a look at a technical analysis one could assume that the price could rebound towards a 12500 level which might be additionally underpinned by a downward trend line. On the other hand, a breakout below a local support placed at around 12375 could accelerate losses and spark an ultimate decline to 12300. In short, until there is no a break of either downward or upward trend line swings of the price should be contained.
The DE30 is losing its appeal as a majority of listed stocks are below their yesterday’s close. Source: Bloomberg
Moods in Europe are not the best, the main reason behind it is yesterday’s news pertaining to an expansion of the probe into US President Trump. That news sent all equity markets much lower bringing another source of uncertainty. As a result, the European indices ended Thursday’s trading lower which caused declines across Asian markets. The NIKKEI (JAP225) slipped 0.22%, the Shanghai Composite (CHNComp) lost 0.21%, the Hang Seng Composite (HKComp) went down 0.63% whilst the Australian S&P/ASX200 decreased 0.67%.
After the mediocre beginning of trading in Europe, investors have been able to erase some losses, in effect, major indices are hovering close to the unchanged. The DE30 is losing 0.0%, the CAC40 (FRA40) is sliding 0.06%, the EuroStoxx50 (EU50) is going down 0.07%, whereas the FTSE100 (UK100) is adding mere 0.08%.
As we pointed out in summary, Commerzbank (CBK.DE) is the worst performing stock in the DE30. It could stem from the fact that S&P published its criteria tilted “Risk-Adjusted Capital Framework Methodology” to evaluate the capital adequacy of bank and certain non-bank financial institutions, Commerzbank has been put to be evaluated among others. Moreover, the German bank was downgraded by UBS from buy to neutral with a new price target at 11.5 EUR implying a 9.2% increase from the last close.
In turn, Deutsche Lufthansa (LHA.DE) is the best stock, albeit there was no specific news which could justify a rebound. On the other hand, it could come from the fact that the company plummeted in the past days on the back of disappointing earnings, hence some corrective moves could be possible. The firm’s new forecast indicates that H2 unit revenue will decline vs. a 0.5% increase reported in H1.