DE30: DAX makes biggest weekly drop since October 2008

• Rout on the global stock market continues

• DAX tests 11800 pts handle, the lowest level since end-Q3 2019

• BASF (BAS.DE) warns of a hit to chemical industry

Rout on the global stock markets shows no signs of easing. European markets are taking another steep dive today with DAX trading over 4% lower and at the lowest level since end-Q3 2019. Peter Altmaier, German Economy Minister, held a press conference yesterday on potential actions aimed at limiting negative impact from the coronavirus outbreak. Among possible actions Altmaier named reducing tax burden for companies or boosting tax relief for digital investments. However, politician hinted that those measures should not be considered stimulus in the “classical sense”.

Source: xStation5

German DAX is down 13.5% this week. This is the biggest weekly drop for the index since the week of October 10, 2008 when the index plunged 21.6%. A look at the daily DE30 chart shows insane downward momentum. Index broke support zone at 50% and 61.8% Fibo level of the upward impulse and reached support zone at 78.6% Fibo level (11800 pts). This level served as the upper limit of the short-term consolidation in August 2018. Break below it would pave the way towards the lower limit of that consolidation at 11475 pts. This is the support to watch. Traders should keep in mind that European coronavirus cases may spike over the week and indices may find themselves under pressure on Monday once again.

DAX members at 9:57 am GMT. Source: Bloomberg

BASF (BAS.DE), the German chemical giant, issued a coronavirus-related warning. The company said that the chemical industry may experience the lowest production growth since the financial crisis. BASF warned that plunge in demand may cause it to report the second year in a row of declining earnings.

Brussels Airlines, subsidiary of Lufthansa (LHA.DE), said that it will freeze hiring and will reduce flights to Milan, Rome, Benice and Bologna.

ThyssenKrupp (TKA.DE) reached an agreement with Advent-led consortium to sell its Elevator Technology unit. The unit will be sold for €17.2 billion. However, ThyssenKrupp will invest €1.25 billion in a stake in the unit. The German industrial company does not plan to pay out a special dividend with proceeds from sale.

Munich Re (MUV2.RE) confirmed long-term targets in spite of missing market estimates in the final quarter of 2019. The German reinsurer reported Q4 profit of €217 million against expected €279 million due to higher-than-expected natural disaster claims. Company’s CFO said that risk for the company from coronavirus outbreak is limited because clients rarely include pandemic risks in reinsurance contracts. Nevertheless, the company is one of the worst performing DAX stocks today.

Analyst actions

• Deutsche Boerse (DB1.DE) raised to “hold” at Bankhaus Metzler. Price target set at €143