DE30: BASF gains on Nord Stream 2 breakthrough

Summary:

• Stocks in Europe continue to recover, Russian and Polish equities underperform

• DAX (DE30 on xStation5) eyes a test of the 33-period moving average on the H4 interval

• Bankhaus Metzler hints that BMW (BMW.DE) may disappoint with earnings just as other carmakers did

Stock from the Old Continent are generally trading higher on Wednesday with Italian equities leading gains. However, a few exceptions can be spotted - declines can be observed in Portugal, Russia and Poland. Chemical and miners can be found among outperformers while utility companies take the biggest step back.

DE30 has been trading within an uptrend since the turn of 2018 and 2019. However, the benchmark turned lower today and may be set to test the 33-period moving average on the H4 interval later today (green line on the chart above). Note that a break below this hurdle would pave the way toward the support zone around 11000 pts handle. Source: xStation5

Negotiators from the European Commission, the European Parliament as well as 28 member countries reached a preliminary agreement on controversial Nord Stream 2 gas pipeline. Let us recall that the pipeline became bone of contention as Western European countries like Germany hailed economic benefits coming with it while other countries, mostly Baltic, warned that such a project would increase EU dependence on Moscow. Under the agreement all pipelines used for importing energy should meet EU energy market laws. It means that it cannot be directly owned by an energy supplying company, cannot be subject to discriminatory tariffs and at least 10% of its capacity must be made available for third parties. The draft will be now reviewed by diplomats from the 28 EU members countries and in case it wins their approval it will be put under vote in the European Parliament. However, winning an approval in the EU parliament is usually a formality once member countries approve the legislation. Among companies involved in building the pipeline one can find Gazprom (OGZD.UK), Uniper, Wintershall, Shell (RDSA.NL), OMV (OMV.DE) and Engie (ENGI.FR).

Major European stock market indices after the first two hours of trade:

• DAX (DE30): +0.07%

• FTSE 100 (UK100): +0.41%

• CAC40 (FRA40): +0.24%

• IBEX (SPA35): +0.01%

• FTSE MIB (ITA40): +0.70%

DAX contribution breakdown after the first two hours of trade. Source: Bloomberg

Company News

BASF (BASF.DE) can be found among 10 best performing DAX stocks today. The company is gaining since the start of the session thanks to the news concerning Nord Stream 2 pipeline we have mentioned earlier

BMW (BMW.DE) can be found among weakish DAX members today. The carmaker had his one-year price target reduced at Bankhaus Metzler, from €80 to €70. The Bank reasoned its decision by saying that most of the carmakers disappointed with 2018 earnings so far and given that the second half of the past year was especially tough for BMW there is little scope for this company to perform much better. Nevertheless, as stock market multiples for BMW look attractive the Bank refrained from reducing the recommendation to “sell”.

ThyssenKrupp (TKA.DE) can be found among the worst performing DAX members on Wednesday morning. The company’s share price suffers following a downgrade ThyssenKrupp received at AlphaValue. The analysts lowered recommendation for the stock from “add” to “reduce”.