DE30 continues retreat from YTD highs

• European indices trade lower on Thursday

• DE30 tests lower limit of the Overbalance structure

• Wirecard (WDI.DE) engaged in a fraud?

Moods at the beginning of the European are poor with German, Spanish and Russian equities being the top underperformers. Austrian equities can be seen as an exception as ATX (AUT20) trades above yesterday’s close.  Economic calendar is dominated by central banks but rate decision should not have much of an impact on the German stock market.

Source: xStation5

In spite of Wall Street breaking to new record highs each day, DE30 continues pullback from YTD highs. The German index dipped at the beginning of Thursday’s session and test the lower limit of the Overbalance structure at 13165 pts. The index failed to break below and climb back to the 200-hour moving average (purple line). Nevertheless, the downward move was resumed later on and the index threatens to make another test of the aforementioned 13165 pts handle. Should DE30 break below the support at 13150 pts, decline towards the 13050 pts could be on the cards. A point to note is that if DE30 performed in-line with US500 this year, the German index would now trade at around 13440 pts.

DAX members at 10:13 am GMT. Source: Bloomberg

BMW (BMW.DE) and Daimler (DAI.DE) announced withdrawal of joint car-sharing service from North America as well as from three European cities (Brussels, London and Florence). The decision will take effect next year and is reasoned with rising costs and low ridership. The move suggests that plans of German carmakers to set up a company that will be able to compete with Uber Technologies or Lyft failed. 

Financial Times reported another dubious activity of the German payments firm, Wirecard (WDI.DE). According to the report, Wirecard bought the Indian company for €340 million just weeks after it was sold for €37 million. The paper suggests that the transaction could be a fraud.

According to Handelsblatt report, Deutsche Bank (DBK.DE) is set to cut 6 thousand jobs in private banking division. Cuts are said to be a part of the 18000 jobs that the bank wants to slash by 2022.

Analyst actions

• Hugo Boss (BOSS.DE) was cut to “hold” at Deutsche Bank. Price target was set at €48.

Deutsche Bank (DBK.DE) snapped a losing streak and broke above the downward trendline. Share price attempts a break above €7.00 today. The nearest resistance zone to watch ranges around the €7.20 handle. Source: xStation5