DE30 erases morning bounce and pulls back below 13450 pts

• European car sales jump 21.3% YoY in December

• DE30 erases morning bounce and pulls back into downward channel

• RWE (RWE.DE) set to receive €2.6 billion from the German government

European stock market indices post small gains on Thursday following the signing of the US-China trade deal. Swedish and Russian equities gain the most while Austrian and Swiss stocks lag. Miners and oil companies lead in Europe while travel companies are the biggest laggards.

Source: xStation5

DE30 managed to break above the upper limit of the downward channel at the beginning of today’s session following signing of the ‘Phase One’ trade agreement. However, the German index reversed at the bottom of the second hour of Thursday’s cash session and pulled back below the upper limit of the channel. The level to watch through today’s session is 13450 pts, where one can find the upper limit of the channel and previous price reactions. Should the index continue to slide yesterday’s low at around 13400 pts could be in play. Release of ECB minutes scheduled for today (12:30 pm GMT) should not have much of an impact on the market as the latest meeting was a non-event.

DAX members at 9:27 am GMT. Source: Bloomberg

European car sales data for December was released this morning. Overall European sales were 21% YoY higher as carmakers rushed to sell vehicles ahead of tougher emission rules in 2020. Sales of Daimler (DAI.DE) jumped 18.3% YoY, Volkswagen’s (VOW1.DE) were up 21.3% YoY while BMW (BMW.DE) sold 15.9% more cars than in December 2018.

Wirecard (WDI.DE) is the top performing DAX member on Thursday. Stock posts a close to 5% gain. However, so far no reports have surfaced that could justify the jump.

Bloomberg reports that RWE (RWE.DE) is set to receive €2.6 billion compensation from Germany for national coal exit. This is more than previously expected. RWE trades among DAX leaders today.

Beiersdorf (BEI.DE) reported preliminary sales figures for full-2019. Revenue of €7.65 billion was in-line with median estimate. Organic revenue grew 4.1% YoY, thanks to the strong performance of the Consumer segment. The company still expects full-year Ebit margin from continued operations at around 14.5%.

Analyst actions

• Telefonica Deutschland (O2D.DE) was cut from “neutral” to “sell” at Goldman Sachs. Price target was set at €2.40

• Infineon Technologies (IFX.DE) was raised from “underweight” to “equal-weight” at Barclays. Price target was set at €21

• Aixtron (AIXA.DE) was raised from “equal-weight” to “overweight” at Barclays. Price target was set at €12

BMW (BMW.DE) attempts to make a break below the support zone ranging near the 38.2% Fibo level of the downward move started in early-2018. Traders should pay attention to the SHS pattern - its target points to a €70.40 handle, where previous price reactions can also be found. Source: xStation5