DE30: European indices experience post-FOMC weakness

• Stock in Europe trade slightly lower

• DE30 tested 15,615 pts area after FOMC decision

• European car sales increased 74% YoY in May

European stock markets are trading lower on Thursday, following a hawkish FOMC announcement yesterday. However, indices managed to bounce off daily lows and now trade just slightly lower on the day. Banks are top movers in Europe today. Automotive sector is also performing decently following a release of European car sales data for May.

Source: xStation5

DE30 plunged following yesterday's FOMC decision and tested support at 61.8% retracement of a recent upward move (15,615 pts area). The index has recovered slightly since but the resistance zone at 15,720 acted as a limited upward move. Traders should note a clear downtrend structure on M30 interval with lower lows and lower highs. In order to invalidate this structure, DE30 would need to jump above the 15,740 pts mark. A support zone ranging between 15,680 pts and 38.2% retracement (15,690 pts) is being tested at press time. In case we see a break lower, index may drop and retest recent lows in the aforementioned 15,615 pts area. Breaking below this hurdle could be seen as a warning sign that a bigger downward move is looming.

Company News

European car sales increased 74% year-over-year in May 2021. While at the first glance the increase may seem enormous, investors should remember that year-ago sales were depressed due to coronavirus lockdowns. In fact, compared to May 2019, sales were around 25% lower. Volkswagen (VOW1.DE) sales increased 93.7% YoY in May 2021 and were 29.4% year-to-date higher, Daimler (DAI.DE) sales increased 49.3% YoY in May 2021 and were 29.8% year-to-date higher, while BMW (BMW.DE) sales increased 95.9% YoY in May 2021 and were 35% year-to-date higher.

Deutsche Bank (DBK.DE) is trading higher today. The move can be reasoned with yesterday's FOMC meeting. According to a dot-plot, 13 out of 18 Fed officials see at least one rate hike in 2023 while 11 officials see at least 2 rate hikes that year. Tighter monetary policy conditions are beneficial for banks as they usually lead to improvement in interest margin profits. US banks jumped following the FOMC announcement and a similar move can be seen today in Europe with Deutsche Bank gaining over 3% and being the best performing DAX member.

Deutsche Bank (DBK.DE) trades over 3% higher today, following a hawkish message from FOMC yesterday. Stock bounced off the €11.27 support area, marked with previous price reactions as well as the 50-session moving average (green line). As share price remains above the lower limit of local market geometry (€10.83) as well as the lower limit of large Overbalance structure (€10.15), uptrend structure remains intact. Source: xStation5