Summary:
- European equity markets have started the week with moderate declines
- DE30 trades within the bullish channel
- Infineon Technologies (IFX.DE) has decided to suspend deliveries to Huawei
The beginning of trading in Europe is bringing moderate declines following a mixed session in Asia. This has come despite rises in risk-related currencies like AUD and NZD suggesting a risk-on mode. However, both Antipodean currencies have been steered by the elections’ outcome in Australia, but we doubt this will have a longer-lasting impact on the Aussie. Keep in mind that the Australian dollar should be still driven by the ongoing trade frictions between the US and China. Moderate declines across European equity markets signal no change of the technical landscape in the German index as it keeps moving within the bullish channel. Looking at the chart below one may notice that the price has space to move either up or down before making any breakout. The first major resistance is placed in the vicinity of 12 440 points, while the support could be found nearby the lower end of the channel. This area is also supported by the 50DMA.
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The DE30 keeps trading within the upward channel in early European trading. Source: xStation5
Last week US President Donald Trump blacklisted Huawei as another step in the ongoing trade war with China. This has already led to some suspension of deliveries to the Chinese company. Google informed about such a decision several hours ago. In Europe, the Trump’s decision is also affecting businesses with the Infineon Technologies also suspending shipments to Huawei, as Nikkei reported. The German chipmaker has yet to respond to request for comment and its shares are trading almost 4% down after nearly 30 minutes of Monday’s trading.
Infineon shares are falling this morning after the company has reportedly suspended its deliveries to Huawei. Source: Bloomberg
In the other company news we may notice the falling price of Deutsche Lufthansa shares following Ryanair earnings. The latter presented its FY 2019 outlook being slightly below expectations. This has cast a shadow on other companies as well - easyJet is declining 3%, Air France-KLM is going down 2%, TUI is sliding 1.6%.
The last stock of note this morning is HeidelbergCement being 0.7% down after the firm was downgraded by Societe Generale to sell from hold. A new price target was set at 62 EUR, implying a 12% decrease compared to the spot price. It is worth noting that prior the SocGen recommendation, the German company had no sell calls, 10 holds and as many as 23 buys.
Technically shares of HeidelbergCement are trading in the middle of the key technical levels. The first one is the 50% retracement of the downtrend since the beginning of 2018, and the second one is the area of 65 EUR. If the price approaches one of the mentioned levels, it could encourage investors to step in the market pushing the price back to the consolidation. Source: xStation5
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