Summary:
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Ifo current assessment subindex ticks higher in June
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DAX (DE30 on xStation5) fails to break above the 12750 pts handle painting a double top
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Deutsche Bank’s (DBK.DE) fixed-income trading revenue disappoints in the second quarter
Today’s Asian session provided a mixed picture of the region’s equities, similarly to the US session yesterday. In Australia S&P/ASX 200 (AUS200) closed 0.29% lower (even despite the weakening of domestic currency). The Japanese Nikkei (JAP225) added 0.4% while the Chinese Hang Seng (CHNComp) moved 0.92% higher.
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Create account Try a demo Download mobile app Download mobile appThe blue chip indices from the Western Europe opened in the vicinity of previous closing prices on Wednesday. Minor gains were observed on the UK and Belgian bourses while the German, French and Spanish stocks underperformed in the first minutes of European trade. Retailers and personal goods companies accounted biggest gains following the opening while miners were the biggest laggards.
In its annual security report chief of the German intelligence, Hans-Georg Maassen, recognized the risks connected to the Chinese acquisitions of the German companies. Maassen highlighted that the Chinese purchases of the high-tech firms poses a potential threat to the national security of Germany. It should be noted that the same reasons were behind Trump’s initial aggression towards China. However, it is rather unlikely that the German Chancellor Merkel will react in the similar manner to the US President Trump. Apart from the acquisitions Maassen stressed cyber attacks (mainly conducted by Russia and China) and rising threat from Islamists as a additional risk factors for Germany.
The Ifo business expectations and climate gauges barely moved in June. Source: Macrobond, XTB Research
At 9:00 am BST the Ifo Business Climate index was published and it saw a minor downtick from 101.8 to 101.7 pts. While the expectations subindex declined once again the current assessment one actually managed to move higher from 105.2 pts (revised higher from 105.1 pts) to 105.3 pts. This is another readings showing that the German companies are not so optimistic about the future.
Major European stock indices after the first hour of trade:
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DAX (DE30): -0.17%
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FTSE 100 (UK100): -0.26%
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CAC40 (FRA40): +0.21%
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IBEX (SPA35): -0.17%
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FTSE MIB (ITA40): -0.02%
DE30 retreats after failing to break above the 12750 pts handle. Source: xStation5
DE30 marched higher in the first half of the yesterday’s trading session. However, the German benchmark has failed to break above the 50% Fibo level of the February’s rout (12750 pts) once again. In turn the double top at 12750 pts handle was painted and if this formation is to be played out in a textbook manner a pull back towards the 12400-12450 pts may be on cards. Nevertheless, prior to reaching this area bears will need to overcome the support level at 12600 pts that is additionally strengthened by the 33-period moving average.
Linde (LIN.DE) surges following a strong earnings beat. Source: Bloomberg
Company News
Deutsche Bank (DBK.DE) reported second quarter earnings today. The revenue reached 5.59 billion euros being just a notch below the company’s guidance of 6.6 billion euros. Earnings provided a positive surprise as 506.6 million euros net profit is above both the mediane estimate (459.7 million euros) and the company’s guidance of 400 million euros. In turn the EPS ratio reached 0.235 euros against median estimate of 0.165 euros. However, it should be noted that the German lender’s fixed-income trading revenue declined around 17% YoY to 1.37 billion euros, marking its worst second quarter since the financial crisis. After the first hour of trade Deutsche Bank has traded 0.95% lower.
Linde AG (LIN.DE) has also reported its earnings prior to today’s opening. The company surprised investors positively in terms of both earnings and revenue. In the second quarter of the year the chemical company accounted revenue of 4.458 billion euros against forecasted 4.152 billion euros. EBIT reached 669 million euros while the markets expected just 540.3 million euros. Moving to the EPS the report saw ratio at 2.31 euros, around 12.7% higher than median estimate. Combining all of the above one should not be surprised that Linde is the best performing DAX stock at the beginning of today’s session. After the first hour of trade Linde has added 2%.
Deutsche Bank (DBK.DE) earnings report has been somewhat disappointing, especially when it comes to trading revenue. In turn the lender’s share price retreated from the lower limit of the resistance zone ranging 10.50-10.75. If the bears manage to break below the 8-session moving average a test of the support level at 10.00 may be looming. Source: xStation5
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