DE30: DAX breaks to fresh two year low

Summary:

• French Finance Minister says his country will impose digital revenue tax on national level if EU-wide agreement fails to be reached

• DAX (DE30 on xStaiton5) breaks below 11000 pts handle for the first time in two years

• Wirecard (WDI.DE) expands collaboration with Wizz Air

Following steep declines seen in Asia stock markets from the Old Continent opened lower on Thursday. Polish and Dutch equities were among the biggest underperformers in the first minutes of trade while stocks in Switzerland proved to be the most resilient to the downward pressure. Miners and builders are among the worst performing sector groups while food and utility companies take the smallest step back.

As the trade truce between China and the US remains questionable the German DE30 (DAX futures underlying) continues its downward move. The index broke below the 11000 pts handle in the morning and in turn is trading at new 24-month low. In case the situation is to continue the next support in line is the price zone ranging 11760-11830 pts, that marks the upper bound of the consolidation from late-2016. Source: xStation5

Discussion concerning the implementation of the digital tax revenue has been vivid among the European Union members as of late. However, as the European Union consists of a number of countries the conclusion of the discussion may take time to surface. Some countries do not want to wait for it. One of such countries is France. The French Finance Minister, Bruno Le Maire, said that in case the European Union cannot reach consensus on the matter his country will tax online giants, like Facebook or Google, on the national level. Le Maire said that he gives European Union time until March next year and if no solution is worked out until then France will carry on with its own tax.

Brexit vote in the UK Parliament is getting closer and closer therefore it may be wise to take a look at moods among the UK lawmakers. The odds still do not seem to support PM Theresa May and her Brexit deal. So far 36 lawmakers indicated that they will oppose the deal during the vote while just 7 MPs said that they will vote for the deal. Until the vote is held Theresa May will be meeting with Tory rebels trying to convince them that her deal is the best option available for the UK. The vote will take place on Tuesday, 11 December.

Major European stock market indices after the first hour of trade:

• DAX (DE30): -1.91%

• FTSE 100 (UK100): -1.5%

• CAC40 (FRA40): -1.77%

• IBEX (SPA35): -1.47%

• FTSE MIB (ITA40): -1.62%

Vonovia resists the downward pressure following the release of 9-month performance data. Source: Bloomberg

Company News

Performance of the German companies constituting the DAX index reflect the moods seen on the whole continent. Almost every company out of 30 DAX components is trading lower today.

Wirecard (WDI.DE) announced that it will expand its collaboration with Wizz Air, the European low cost carrier. In addition to previous acquiring services Wirecard will now also provide payment processing services to Wizz.

Vonovia (VNA.DE) is one of just a few DAX stocks that are trading higher. The company released its FFO (funds from operations) data for the nine month period today. FFO in that period reached €778.2 million what result in FFO per share of €1.5. The nine month profit was €1.4 billion while the rental income reached €1.29 billion.

Vonovia (VNA.DE) tries to climb back above to the all-time-high around €44.90 handle reached at the turn of August and September this year. The latest plunge was halted by the 50- and 200-session moving average as well as the 38.2% Fibo level of the downward move started at the beginning of September. In case the upward move is to extend investors may want to watch for the 78.6% Fibo level that fend off bulls twice recently. Source: xStation5