• European stocks benefit from bullish comments from central banks
  • German banks are the top beneficiaries of hawkishness
  • DAX (DE30 on xStation5) could rebound after closing a bullish gap

Evens as global central banks are beginning to talk about possible rate hikes which might be necessary before long, global stocks have played down such remarks. Needless to say, the higher rates, the less incentive to put money into risky assets. Either way, bullish views shared by global central bankers seem to reassure investors regarding outlook for the global economy.

link do file download link

From a H4 interval point of view, a move higher on the DE30 has been questioned as price is returning towards 12640 points which could be a potential buying opportunity. Source: xStation5

First of all, let’s take a glance at the H4 chart. One could notice that price is moving downwards within a descending channel. For that reason, any larger move upwards could emerge if price manages to break out of a top limit of the channel. If it happens, bulls could aim at 12850 points as a potential price target.

link do file download link

The German DE30 has already closed a bullish gap. Price action could herald a retest of 12640 points which might decide about the future scenario. Source: xStation5

A M30 time frame shows that price has already managed to close a bullish gap. On that account a retest of a support placed at 12640 pts. cannot be excluded. If bulls defend this level (what should be reflected by a bullish candlestick) it could lead to a rebound towards an upper limit of the channel. On the other hand, if bears manage to break this support it could mean a decline towards 12520/12530 pts. 

link do file download link

The DE30 has started the day with gains as most of stocks are on the green side. Source: Bloomberg

Global indices experienced sanguine moods yesterday. On the Wall Street, the NASDAQ (US100) turned out to be the best index which closed up 1.43%. Besides, both Dow Jones (US30) and SP500 (US500) ended the session with gains by 0.68% and 0.88% respectively. Looking at Asian session, upbeat moods were continued. The Japanese NIKKEI (JAP225) picked up 0.45%, the Shanghai Composite (CHNComp) added 0.47%, the Hang Seng (HKComp) rose a mere 0.04% while the Australian S&P/ASX200 was the best performer and gained as much as 1.08%.

Company news

German banks are among the best performers within the DE30 today as the prospect of higher rates could improve their profitability. Moreover, Deutsche Bank (DBK.DE) is gaining following a report that a US judge dismissed a lawsuit by DB investors over “mirror trades” (a copying transactions from more experienced traders) that allowed wealthy Russians to move billions of dollars out of the country, saying the shareholders failed to show how the bank mislead them.

Furthermore, the second best stock is Commerzbank (CBK.DE) as it’s believed that it should be a top beneficiary among EU banks after the ECB’s President Mario Draghi talked up the outlook for the euro-zone economy. What’s more, the lender has said that a 100 bps parallel rise in rates would boost revenue by up to 1 billion euros, that’s more than its average annual pretax profit since 2012.

The worst performing stock is RWE (RWE.DE) after a downgrading the stock by Commerzbank from ’hold’ to ’reduce’. A new price target has been set at 17.7 EUR and is to be achieved within 6 months. It implies a 2.7% decline from the last close. It’s worth underscoring the target is 9.9% below the consensus average of 19.65 EUR. As of yesterday, RWE had 14 ’buy’ calls, 14 ’holds’ and just 2 ’sells’.