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European stocks trade slightly lower amid thin volumes
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DE30 struggles at the upper limit of the Overbalance structure
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Department of Justice and EPA side with Bayer (BAYN.DE) in Roundup case
Major stock market indices from Europe launched new week lower echoing poor performance of the Asian equities. Nevertheless, one should not forget that global equities had a very good year so far. DAX trades around 26% higher YTD, marking the best year since 2012 when it rose 29%. French CAC40 and US S&P 500 have the best year in a decade while Nikkei’s gain of 19% YTD is the best one since 2013 (+56.7%). Trading volumes are low today and one should not expect liquidity to pick-up in the later part of the day as traders are awaiting Christmas break.
Source: xStation5
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Create account Try a demo Download mobile app Download mobile appIncreased risk appetite on Friday allowed DE30 to bounce off the support zone ranging 13160-13175 pts. Strong upward move brought the price to the resistance zone ranging 13320-13330 pts that also coincides with the upper limit of the Overbalance structure (yellow box). The index did not manage to break above the zone but keeps testing it. Nevertheless, long upper wicks of recent candlesticks on the H1 interval suggest that bears are holding firm above the 13330 pts. Price reactions suggest that the index may turn lower. In such a scenario, the aforementioned support zone should be the first level to watch. Breaking below the 13160 pts would pave the way towards the 13050 pts handle.
DAX members at 9:32 am GMT. Source: Bloomberg
Bayer (BAYN.DE) is the best performing DAX stock at the beginning of a new week. The company gains after some of the US agencies sided with the German company. Department of Justice and Environmental Protection Agency said that previous rulings in the Roundup case should be overturned as it would be illegal for Bayer to post cancer-risk warnings on the bottles of Roundup.
Kasper Rorsted, CEO of Adidas (ADS.DE), confirmed in an interview with FAZ that the company is going for a record sales and profit this year. Such a good performance can be ascribed to a pre-Christmas shopping period that the company said “went very well”. Moreover, the executive also said that the company wants to increase the number of shoes produced from recycled plastic to 20 million pairs next year from 11 million pairs this year.
BASF (BAS.DE) agreed to sell construction chemicals business to the US private equity firm, Lone Star. The deal is valued at €3.17 billion. Lone Star said that the acquisition will complement its portfolio of investments in construction materials sector. The unit operates in over 60 countries and generated around €2.5 billion revenue in 2018. Transaction is expected to close in Q3 2020.
Share price of Adidas (ADS.DE) broke above the upper limit of the sideways channel at €289. The stock gains on Monday thanks to upbeat comments from CEO Rorsted. Price is nearing the all-time high at €296.70. The next level to watch in case of a break higher can be found at €323.50 - the 161.8% Fibo level of August’s decline. Source: xStation5
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