DE30: German stocks give up early gains

• European markets struggle to hold onto early gains

• DE30 jumps above 12,000 pts and drops below 11,900 pts later on

• Volkswagen (VOW3.DE) plans to squeeze out minority shareholders of Audi

European stock markets launched a new week significantly higher. Recovery comes amid hopes that central banks will step in to limit economic damage caused by coronavirus outbreak. However, additional liquidity or stimulus will not cure the virus. Having said that, ongoing upward move may be just a dead cat bounce as the virus continues to spread worldwide and damage is likely to increase. 

Another migrant crisis underway?

While coronavirus is a dominating theme nowadays, Europe may have to cope with another crisis soon. Turkey told migrants that it will not stand in their way in case they decide to leave the country. As a result, thousands of migrants headed for the Greek border. Clashes with Greek border forces erupted. Greece decided not to accept new asylum applications for a month. The situation comes as Turkey battles with an increase inflow of Syrian refugees due to its military actions in the country. Should the migrant wave pass through to Europe, voices of dissatisfaction are likely to surface. This is important for the EU as the previous migrant crisis was one of the reasons why the United Kingdom voted “leave”.

Source: xStation5

DE30 gained overnight and surged shortly before the launch of today’s cash session. The index tested 12,205 pts handle - intrasession low from Thursday, February 27 - but failed to break above. The index has been moving lower since and has broken back below the downward sloping trendline that has been guiding last week’s steep sell-off. The index is now trading within a range of the consolidation that limited index’ moves on Friday (11750-11965 pts). Limits of the range are the closest levels to watch for now. Investors should keep in mind that breaking below 11750 pts may signal a resumption of last week’s turmoil.

DAX members at 9:43 am GMT. Source: Bloomberg

Lufthansa (LHA.DE) announced it plans to reduce the number of flights significantly. Reductions will be carried in all of the company's brands. Short-haul flights will be cut by up to 25% over the coming weeks. The company increased the number of grounded long-haul aircrafts from 13 to 23. The company said it cannot estimate a hit to earnings at the moment.

According to Financial Times, Deutsche Bank (DBK.DE) is required to give monthly updates on its anti-money laundering practices to the Bank of England. Earlier the German company was required to make quarterly updates on the matter. The move comes after the German bank accidentally sent data on clients’ transactions to a corporate client. Should the German bank fail to disclose the information, it risks losing access to the UK market after Brexit.

Merck (MRK.DE) announced that China’s National Medical Products Administration approved its Erbitux drug. The drug is used in first-line treatment of patients with recurrent or metastatic squamous cell carcinoma.

Volkswagen (VOW3.DE) announced it plans to buy out minority shareholders of its subsidiary, Audi. The company plans to make the brand a leader of its R&D push. Volkswagen currently holds 99.64% of Audi shares.

Volkswagen (VOW3.DE) plummeted on recent coronavirus-related market sell-off. The stock caught a bid on Friday and continued to gain at the beginning of today’s session. However, share price is pulling back from intraday highs at press. The move looks justified from a technical point of view as the stock is pulling back from an important long-term price zone (€154). The nearest support can be found at €147.50. Source: xStation5