DE30: EC may reject Siemens-Alstom rail merger in February

Summary:

• Germany may increase number of wind power auctions

• DAX (DE30 on xStation5) breaks above the downward sloping trendline

• Deutsche Bank (DBK.DE) could have lost “three-digit million” in revenue due to November’s police raids

Stocks in Europe opened significantly higher today what can be to some extent ascribed to weaker euro. Shares in Germany coped especially well at the beginning of today’s session. On the other hand, UK companies were the worst performing ones but even there gains were spotted. Miners and IT stocks led advance while real estate companies were the only sector to decline at the beginning of trade.

Yesterday we wrote that trading range on DE30 chart is narrowing and the break may be looming. Situation cleared today as the German benchmark opened above the downward sloping trend line. If the upward move is to be extended the first bears’ resistance may surface around 11500 pts handle coinciding with local high from the beginning of December 2018. Source: xStation5

The German authorities are said to increase the number of auctions for the offshore wind power. The move is part of German government efforts to boost share of clean energy in country’s power mix. Germany plans to generate as much as 65% of power from eco-friendly sources by 2030. However, there is also other side of the story. Previous tender schedule risked creating a three year gap in auctions. Such an outcome would harm turbine makers and other entities involved in building wind farms. Having said that, effort to increase number of auctions may be also aimed at protecting businesses and jobs. More details on the matter are expected to be announced during the next month.

The German IFO indices were released at 9:00 pm GMT. The headline gauge missed expectations by dropping from 101 pts to 99.1 pts (expected drop to 100.7 pts). Expectations subindex took the biggest dive as it moved from 97.3 pts to 94.2 pts (expected 97.1 pts). Current assessment gauge was the only one to come in above expectations at 104.3 pts.

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

• DAX (DE30): +1.29%

• FTSE 100 (UK100): +0.40%

• CAC40 (FRA40): +0.84%

• IBEX (SPA35): +0.77%

• FTSE MIB (ITA40): +0.90%

German equities are performing really good today causing DAX to be the strongest blue chips index from the Old Continent. Source: Bloomberg

Company News

Police raids on Deutsche Bank offices in November 2018 could have costed the company a significant amount of money. According to the Handelsblatt report, the Deutsche Bank could have lost a “three-digit million” in revenues due to the police actions. This relates especially to the US clients as raids created an impression of “state’s lack of trust in the bank and its CEO”. The information is unofficial and based on two sources familiar with the matter.

According to L’Echo report, the European Commission is said to reject the European rail merger of Alstom (ALO.FR) and Siemens (SIE.DE). The report states that five European antitrust authorities submitted their objections to the tie-up. The information was not confirmed by the EU authorities yet.

Deutsche Boerse (DB1.DE) was upgraded from “sell” to “hold” at Bankhaus Lampe. One-year price target was raised from €97 to €105.