DE30: German stocks sink on virus fears, Lufthansa down 7%

• European stock markets sink on coronavirus concerns

• DE30 tests the lower limit of the Overbalance structure

• Lufthansa (LHA.DE) sinks over 7%

European stock markets opened significantly lower on Monday, echoing poor performance of equities during the Asian trading hours. Italian FTSE MIB (ITA40) is top laggard as it sinks over 4%. Italy said that it has confirmed over 150 cases of the novel coronavirus. Country’s government imposed a lockdown on an area near Milan inhabited by 50,000 people and decided to cancel the remaining days of the Venice Carnival.

In other news, IFO business climate index for February increased from 96 pts (revised higher from 95.9 pts) to 96.1 pts. Market expected a drop to 95.3 pts. Expectations sub-index grew from 92.9 to 93.4 pts while current assessment gauge dropped from 99.2 to 98.9 pts.

ECB officials call for more government stimulus amid coronavirus outbreak

Francois Villeroy de Galhau and Ignazio Visco, two ECB members, attended a meeting of G20 finance chiefs over the weekend. Central bankers said that in case the economy fails to see a V-shaped recovery now, it will be up to governments to act. Visco and de Galhau said that central banks’ policy is already very accommodative around the world and that the impact of additional easing may be limited. Central bankers also called upon governments to act in a coordinated manner in case coronavirus-related risks continue to increase. Coronavirus was one of the main themes of the G20 meeting and the group decided to label it one of the biggest risks for global growth.

Source: xStation5

The German DAX (DE30) is sinking along with other European stock market indices. DE30 trades around 3% lower against Friday’s close. The index tested the lower limit of the Overbalance structure at around 13065 pts but managed to recover slightly later on. Recovery stalled near the 13100 pts handle. The near-term support to watch can be found at the aforementioned lower limit of the Overbalance structure while the nearest resistance can be found at the zone at 13150 pts. The index ignored better than expected IFO reading earlier today. As there are no major macro reports scheduled for release today, the index is likely to trade on coronavirus-related news.

DAX members at 10:02 am GMT. Source: Bloomberg

Coronavirus concerns pressure European equities during Monday’s session. Luxury goods, airlines, miners, carmakers and tech companies can be found among top laggards today. Lufthansa (LHA.DE) is the worst performing DAX stock and drops over 7%.

New head of Africa operations of SAP (SAP.DE) addressed allegations that some of the company’s employees paid bribes to members of the Gupta family in return for receiving government business in east and central Africa. Executive said that the company is carrying out investigations into the matter but there is “no recipe” for such a complex unusual, hinting that it may take time until the process is completed.

MTU Aero Engines (MTX.DE) announced the opening of a new maintenance office in the aerospace hub in Dubai. The company noted that some of its biggest customers are based in the Middle East and the move will provide them with more flexible service.

Analyst actions

• Bankhaus Metzler maintained a “buy” rating on Allianz (ALV.DE). Price target was raised to €260

• Jefferies maintained a “buy” rating on Deutsche Boerse (DB1.DE). Price target was raised to €175

• Jefferies maintained a “underperform” rating on Deutsche Telekom (DTE.DE). Price target was raised to €14

• Citi maintained a “sell” rating on Daimler (DAI.DE). Price target cut to €33

Lufthansa (LHA.DE) sinks today as surge in new coronavirus cases outside China renewed concerns over impact on travel. The stock is testing the support zone at 78.6% Fibo level of the upward move started on August 16. Should the zone fail to fend off the bears, low from mid-August (€12.90) could be the next target. Source: xStation5