DE30: European equities build on previous gains

Summary:
- Giuseppe Conte warns Salvini about making “confusing” statements
- DAX (DE30 on xStation5) eyes test of the 200-session moving average
- Osram (OSR.DE) is making progress in talks with private equity investors

Stocks from China surged on Monday after pack of survey data showed manufacturing activity in the country is expanding once again. Solid gains were also posted in Japan and Australia. Unsurprisingly, equities from the Old Continent launched Monday’s trading higher. Miners and car makers led advance in the first minutes of trade.

A strong recovery during the past few days brought DE30 back into the vicinity of 200-session moving average (purple line on the chart above). Note that this technical obstacle halted an upward move two weeks ago and bears may loom in the region this time as well. German industrial data scheduled for Thursday and Friday may trigger a strong price impulse therefore investors should keep on guard in the later part of the week. Source: xStation5

While most of Europe focuses on events in the UK parliament now, more and more frictions emerge between Italian governing coalition. Just recently Matteo Salvini , leader of the League, complained about Luigi di Maio, leader of the Five Star, being too slow in implementing procedures aimed at preserving traditional family values. While arguments between the two are not completely uncommon, something was different this time. Usually Giuseppe Conte, the Italian Prime Minister, acted as some kind of a mediator between the two politicians. However, this time Conte addressed Salvini saying that he should think before making “confusing” statements. While at the moment this is not being considered, one cannot rule out the possibility of early elections being held in case divisions continue to deepen. League would be best positioned in such a scenario as the party is scoring high in European elections polls. In fact, good performance in the European ballot could encourage Salvini to seek more control through snap vote a snap vote as it could secure a post of Prime Minister for Salvini and allow his party to rule on its own.

Major European stock market indices after the first half an hour of trade:
- DAX (DE30): +0.89%
- FTSE 100 (UK100): +0.66%
- CAC 40 (FRA40): +0.81
- IBEX (SPA35): +0.65%
- FTSE MIB (ITA40): +0.78%

DAX members after the first 30 minutes of trade. Source: Bloomberg

Company News

Some news concerning the European aircraft manufacturer, Airbus (AIR.DE), surfaced over the weekend. Der Spiegel magazine reported that the company could have paid bribes in relation to its deals with Egyptair. According to the report, company paid around €10 million in bribes in the 2003-2008 period. Prosecutors in Paris are said to be aware of the action but declined to comment on the investigation. On the other hand, Airbus announced that it will explore the possibility of making weapons not including German parts in order to circumvent German ban on weapon exports to Saudi Arabia.

Bayer (BAYN.DE) is lagging DAX surge today after the company was downgraded at Deutsche Bank and Berenberg. Both institutions have cut rating for the stock from “buy” to “hold”. Berenberg reasoned its decision with Bater’s high leverage and big legal risks concerning Roundup weedkiller.

Osram Licht (OSR.DE) is the best performing MDAX member today. CEO of the German lightning company, Olaf Berlien, said that the company is making progress in negotiations with private equity investors over potential takeover. Nevertheless, Berlien warned that it is way too early to speculate on possible delisting of the company.