DE30 gains in spite of Wirecard's insolvency

• European stock recovered from morning drop

• DE30 attempts to break above 12,200 pts

• Wirecard (WDI.DE) opened insolvency proceedings

Stocks in Europe launched Thursday's trade near yesterday's closing prices. However, a downward move was triggered at the start of the cash session but it was followed by an even stronger upward move. DAX trades 0.8% higher and even news on Wirecard's insolvency did not impact sentiment.

Source: xStation5

DE30 dropped below 12,000 pts mark at the start of today's cash session. However, the index managed to recover and rushed towards the resistance at 12,200 pts. Upward move stalled there and it looks like the market awaits a catalyst. There is a pack of US hard data set to be released at 1:30 pm BST and it could spur some short-term volatility. However, a failur to break above 12,200 pts, where 200-hour moving average can be found as well, could see index retain 12,050-12,200 pts trading range. Coronavirus related news are likely to draw more attention in the coming days as US hospitalizations are on the rise and WHO said that Europe saw the first weekly increase in cases in a long time.

DAX members at 10:21 am BST. Source: Bloomberg

Trading on shares of Wirecard (WDI.DE) was suspended at 9:20 am BST for pending news. The company announced that it has opened insolvency proceedings. This is a direct aftermath of an accounting scandal that unveiled a €1.9 billion loop in Wirecard's balance sheet. Former CEO Markus Braun was arrested earlier in the week while Sueddeutsche Zeitung reports that former COO Jan Marsalek plans to turn himself in to prosecutors at the beginning of next week. However, Wirecard has a very small weight in DAX therefore the whole issue does not impact the index too much. Wirecard trading was resumed after one hour and shares dropped to €2.50 or -80% on the day!

Bayer (BAYN.DE) has agreed on a package that will settle Roundup claims in the United States as well as some other claims. Total value of the package exceeds $12 billion. Around €11 billion will be used to settle 95,000 Roundup claims while another $820 million will be used to settle toxic pollution claims. Around $400 million will be spent on claims related to its other herbicides that have dicamba content. 

Lufthansa (LHA.DE) posts strong gains today. Heinz Hermann Thiele, German billionaire who holds 15.5% stake in the company, said that he will support the bailout package proposed by Lufthansa and the German government. Thiele was sceptical about the deal earlier and this has cast some doubts over receiving shareholders' support. Apart from that, European Union gave a final nod for the rescue. Stock trades 15% higher today.

Wirecard (WDI.DE) opened insolvency proceedings signalling that the company's downfall could be terminal (company reportedly dropped to €2.50 after trading resumed). Source: xStation5