Summary:
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Merkel warns other European leaders about taking too bold stance on Brexit
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DAX (DE30 on xStation5) lacks direction in the morning
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Deutsche Bank (DBK.DE) stays open to mergers but wants to get back to profitability first
Downbeat moods could be seen during yesterday’s session on Wall Street as S&P 500 (US500) and Dow Jones (US30) moved lower but tech stocks from Nasdaq index (US100) managed to gain slightly. The same can be said about today’s Asian session. While Australian S&P/ASX 200 (AUS200) finished flat and Japanese Nikkei 225 (JAP225) added 0.15%, Chinese equities declined quite noticeably after holiday on Monday.
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Open account Try demo Download mobile app Download mobile appEuropean stock session opening on Tuesday was mixed. German and French equities underperformed slightly while stocks in Spain, Italy and the UK opened higher. Banks, refiners and miners could be found among outperformers in the first minutes of trade while media and chemical companies took the biggest step back.
DE30 failed to overcome the resistance zone ranging 12380-12420 pts and moved below the range of the aforementioned zone yesterday. Shape of the current H4 candlestick suggests that investors are undecided and mixed on the outlook. However, as the price did not distant too much from the zone, the downward move we are observing may be just a correction ahead of another attempt to break higher. In case the index remains to be pressured the 33-period moving average could be a level to watch (green line on the chart above). Source: xStation5
Summit in Salzburg that took place last week and was widely called a humiliation of the UK PM Theresa May. Now it looks like European leaders realized that they might have been to tough. During her speech in Hannover yesterday the German Chancellor Angela Merkel warned other European politicians that taking too harsh approach towards Brexit could backfire. Merkel continued saying that she wants to work out a deal in friendly atmosphere without acrimony as it could be hurdle toward producing a fundamental vision of post-Brexit relationship. Her comments came not long after the French President Emmanuel Macron exerted additional pressure on the UK lawmakers saying he wants deal to be reached in October, not November as it was previously viewed.
Major European stock indices after the first hour of trade:
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DAX (DE30): -0.05%
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FTSE 100 (UK100): -0.03%
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CAC40 (FRA40): +0.05%
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IBEX (SPA35): +0.40%
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FTSE MIB (ITA40): +0.96%
Wirecard (WDI.DE) leads gains of the DAX index for the second day in a row. Source: Bloomberg
Company News
Christian Sewing, CEO of the Deutsche Bank (DBK.DE), said on Monday that he is open to potential deals and mergers but wants to focus on bringing the Bank back to profitability first. Let us recall that not long ago German officials expressed interest in possible merger of domestic banks before an economic downturn begins so the new institution could support German exporters at that time. However, according to Sewing words we might have to wait around year and a half until talks even begin.
According to the Handelsblatt report, E.ON (EOAN.DE) and Microsoft (MSFT.US) are considering cooperation in developing smart-home software. The software would enable users to manage devices that consume energy and produce energy (i.e. solar panels) more efficiently. Newspaper said that the offering could be available in the early 2019.
Wirecard (WDI.DE) is leading DAX gains for the second day in a row. No major news concerning the company spurred lately but it should be noted that Wirecard replaced Commerzbank (CBK.DE) in the DAX index yesterday effectively.
E.ON (EOAN.DE) dipped below the long term uptrend line for a brief moment but managed to climb back above it later on. The stock needs to overcome the 200-session moving average (purple line) before we can see a longer upward move. Notice that this technical hurdle turned out to be too strong for bulls yesterday therefore positive news flow could be needed to ensure another break attempt is successful. Source: xStation5
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