Summary:
- European stocks trade lower on Tuesday
- DAX (DE30) pulls back towards week’s opening price
- Deutsche Bank (DBK.DE) said to have discussed lowering capital ratios with watchdogs
The European stocks are struggling in the first hours of Tuesday’s session. The underperformance can be explained with the US threat of imposing new duties on the EU. Indices from the eastern part of the Old Continent lag the most while UK stocks advance on the back of the GBP weakening. Meanwhile, the EU leaders still have not agreed on who will fill bloc’s top jobs.
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DAX (DE30) is pulling back on Tuesday and trades close to week’s opening price at press time. The index failed to breach 12600 pts handle yesterday and may now be set to test the breakout level at 12400 pts. In case it fails to fend off the bears, the decline may deepen to as low as the 23.6% Fibo level of the upward move started off December's low. Note that the aforementioned also marks the lower limit of the support zone ranging 12090-12180 pts. Source: xStation5
Deutsche Bank discussed lowering capital ratios with ECB and BaFin
According to the yet unconfirmed reports, the Deutsche Bank (DBK.DE) has been discussing lowering its capital ratio with the German financial watchdog, BaFin, and the European Central Bank. The German lender hopes that lowering capital buffers will help finance restructuring process engineered by the CEO, Christian Sewing. The Deutsche Bank could raise the money for the restructuring process through equity offering but such a move would likely be blocked by shareholders as they would like to avoid interest dilution. As the Bank’s capital ratio are close to minimum set out by regulators, a green light from the European and German watchdog could ease shareholders concerns and lower the scope for sharp and abrupt market reaction once the capital ratios are actually breached. However, neither of the parties involved have commented on the news so far.
DAX members at 10:16 am BST. Source: Bloomberg
Other company news
Thyssenkrupp (TKA.DE) announced that it will acquire O’Keefe Elevator, the company specializing in distribution and servicing of elevators. The company has been Thyssenkrupp’s exclusive distributor for the Iowa and Nebraska states since 1947. However, the terms of the deal were not outlined in the statement therefore it looks like we will have to wait for more details.
Adidas (ADS.DE) is trading slightly lower today following a downgrade it has received at HSBC. The Bank lower recommendation for the stock from “buy” to “hold”. Price target was set at €300. The analysts ruled that following latest gains, further upside for the price is limited and no near-term catalyst for the upward move can be spotted.
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