DE30: European stocks launch Wednesday lower

Summary:
- Siemens (SIE.DE) plans to cut 2700 jobs in power and gas division
- DAX (DE30) tries to stay above the 12300 pts handle
- Volkswagen (VOW.DE) may reduce manufacturing headcount by as much as 20% amid shift to EV

Stock indices from the Old Continent failed to benefit from upbeat moods seen in China and opened lower in most cases. The biggest declines are seen on the Austrian and Polish bourses after the first hour of trade while some gains can be spotted in Russia. Banks and carmakers lead higher while real estate companies lag the most.

Yesterday’s comments from Mario Draghi trigger a stunning rally on the European stock markets, including DAX (DE30). The German benchmark reached the highest level since the beginning of May. Pullback that is occuring on Wednesday morning should not be too much worrying given pace of yesterday’s gains. In case DE30 manages to close the day above the 12300 pts handle, one cannot rule out the possibility of testing YTD high (12460 pts area). Source: xStation5

Siemens (SIE.DE) announced that it will reduce the workforce at its power and gas division by 4% or 2700 jobs. The move is part of the cost overhaul at the business unit ahead of a planned spin-off. Jobs reductions will be spread over a few years and will more than a half (1400) will take place in Germany. Recall that the company announced reduction of as much as 10000 jobs at its other divisions in May.

Herbert Diess, CEO of Volkswagen (VOW.DE), made some remarks on the electric cars during a recent interview with the German broadcaster ZDF. Diess said that launch of operations at two Chinese factories next year will accelerate the adoption of EVs and that these type of cars will become economically viable no sooner than in a decade. He also said that a shift to EVs will be marked with a 20% reduction in manufacturing jobs. Asked about StreetScooter, the German EV manufacturer owned by the Deutsche Post, Diess said his company is not interested in buying it.

DAX members at 8:54 am BST. Source: Bloomberg

According to the Suddeutsche Zeitung, the German newspaper, the Deutsche Bank (DBK.DE) is mulling raising some fees. A fee increase for commercial accounts could come into effect later this year. Potential timing of an increase of security transaction fees has not been disclosed. Apart from that, the Deutsche Bank shares may be more active due to reports that two of its senior dealmakers are in advanced talks over joining Citigroup.

Deutsche Lufthansa (LHA.DE) can be found among the DAX underperformers for the third consecutive day. The German carrier delivered a profit warning at the beginning of this week, a move that spurred range of analyst downgrades. Nord/LB is the latest to release a downbeat rating on the company. The Bank downgraded Lufthansa from “buy” to “hold” and set a price target at €16.

HeidelbergCement (HEI.DE) rose in the second part of  yesterday’s session along with other builders and cement companies. A sector-wide move is said to be triggered by an earthquake that hit off the coast of Japan. Tsunami alert was issued after the earthquake and an upward move across builders can be seen as an anticipation of an increased demand for their services.

Siemens (SIE.DE) has been trading within a downward trend for over two years now. The stock managed to push higher recently but has run into the area that may see more of the bears’ activity. Namely, the stock is testing 200-week moving average (purple line) that is running just slightly below the downtrend line. Failure to overcome those hurdles could trigger a downward move that could take the price to as low as to €100 handle. Source: xStation5