DE30: Lufthansa sinks on demand concerns

• European stock markets sink at the beginning of a new week

• DE30 tests lower limit of the Overbalance structure

• Lufthansa (LHA.DE) plunges on demand concerns

Stocks around the world are taking a hit at the beginning of a new week as investors continue to be concerned about the spread of coronavirus and rising death toll. Declines can be spotted on indices all across the Old Continent with UK FTSE 100 (UK100) being the worst performing western index. On the other hand, the Italian FTSE MIB (ITA40) shows resilience as it drops only 0.5%. The index benefits from the outcome of regional elections that bolstered governing coalition.

German IFO index shows confidence falling

The German IFO data for January was released at 9:00 am GMT. The headline Business Climate index dropped from 96.3 pts to 95.9 pts, while the market expected a jump to 97 pts. Expectations sub-index slid from 93.9 pts (revised higher from 93.8 pts) to 92.9 pts while Current Assessment gauge ticked higher to 99.1 pts (previously 98.8 pts). A look at details of the report shows that the situation improved in manufacturing and trade while deteriorating in services and construction. Release snapped a 4-month streak of increases and pushed EURUSD to new daily lows.

Source: xStation5

DE30 attempted to break above the 13600 pts handle on Friday but failed to do so. The index started to decline after the opening of the US session on Friday and the move is continued today. Bears managed to drag the German index over 200 pts lower against Friday’s close and the lower limit of the Overbalance structure is being tested at press time. Should the index break lower, a trend reversal would occur, at least in theory. In such a scenario, the first support to watch would be local peak from January 7 (13260 pts). In case of a recovery, traders should focus on 13400 pts handle as the first potential resistance.

DAX members at 9:16 am GMT. Source: Bloomberg

Deutsche Lufthansa (LHA.DE) and Air France-KLM (AR.FR) are European airlines with the biggest exposure to China. Concerns over spreading of the coronavirus take toll on their valuation as it is expected that travel to and from China will be limited until the situation is settled. The German carrier is the worst performing DAX stock and sinks over 4% today.

Financial Times reports that Germany investigates payment the Deutsche Bank (DBK.DE) has made to Saudi Royal Adviser. The payment amounted to $1.1 million and was in breach of Bank’s anti corruption policies. Deutsche Bank said that the action was carried out by a small group of individuals and that it was the Bank who reported the case to the prosecutors.

Rolf Martin Schmitz, CEO of RWE (RWE.DE), said that the company's shift towards clean energy will make the nature of the company's business more international. Schmitz said that as he lacks experience in working abroad, he may consider retiring from the company in 2021. Schmitz is 62 years old.

Lufthansa (LHA.DE) is being dragged lower by mounting concerns over the impact of coronavirus outbreak on airline ticket demand. A massive plunge today has brought the stock to the support zone ranging above 78.6% Fibo level. Bulls are trying to halt decline there but in case they fail, attention may shift to a low at €12.55. Source: xStation5