Summary:
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Tesla (TSLA.US) is said to be in talks with German and Dutch authorities over the location of the European factory
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DAX (DE30 on xStation5) may be set to test the support level around 12740 pts
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Lufthansa (LHA.DE) reassures investors it is capable of meeting full-year targets
The main event of the Asian session proved to be a non-event. The latest BoJ actions concerning the purchasing of bonds could suggest that we may have an interesting meeting ahead of us but all in all it did not have any major impact on the markets. Stocks in the region finished today’s trading mostly flat with S&P/ASX 200 (AUS200) adding just 0.03% and Nikkei (JAP225) moving 0.04% higher. In China Hang Seng (CHNComp) is trading 0.2% lower.
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Create account Try a demo Download mobile app Download mobile appThe opening of the Tuesday’s trading session in Europe can be described as mixed. The first minutes of trade saw gains in Germany, UK, Italy and Spain. On the other hand, equities from Netherlands, France or Belgium moved slightly lower. Steep declines were observed in Poland as WIG20 (W20) opened around 0.5% below yesterday’s close. Telecoms and banks are among leaders at the beginning of the European trade while miners and retailers underperform the most.
It is not a secret that Tesla (TSLA.US) is eyeing a building of the European factory. The project has been revealed some time ago and now the automobile company is seeking the most suitable location. According to the Wall Street Journal report Tesla is in talks with the German and Dutch authorities about possibility of setting up a plant there. WSJ claims that Germany and Netherlands are the ones who initiated talks not the company therefore one can assume that there is an interest in such investment. Combining this report with previous news (like Elon Musk’s tweets) it seems that the Germany is the most probable location for the first Tesla factory on the Old Continent for now. However, we may have to wait some time for the final decision as talks are said to be just in the early stage. The European plant will manufacture not only vehicles but also car batteries.
Major European stock indices after the first hour of trade:
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DAX (DE30): -0.14%
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FTSE 100 (UK100): +0.13%
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CAC40 (FRA40): -0.07%
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IBEX 35 (SPA35): +0.44%
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FTSE MIB (ITA40): +0.44%
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WIG20 (W20): -0.69%
DE30 may be set to test the support level at 12740 pts in the nearby future. Source: xStation5
DE30 remains within the range of the short term upward channel. The German benchmark pulled back towards the support level at 12740 pts yesterday but stopped a dozen points above it. Despite today’s higher opening the index has been underperforming and is testing yesterday’s low at press time. In case the bears remain in control of the market a test of the earlier mentioned support level cannot be ruled out during today’s session. If this technical hurdle does not fend off the sellers another point of interest could be the 33-period moving average running a notch above the 12710 pts.
Lufthansa (LHA.DE) shines among DAX index components today. Source: Bloomberg
Company News
Lufthansa (LHA.DE) is the top performing stock from the DAX index today. The carrier reported its second quarter earnings. Company’s profit declined as expected by the scale of a drop was smaller than the median estimate has suggested and it came in at 1.557 euros per share. On the other hand, the revenue provided a miss of 0.78% by coming in at 9.298 billion euros. However, the company assured investors that the step back in the Q2 2018 resulted from the employee strikes and weather disruption and, what is more important, that it is still capable of reaching its full-year goals. This assurance is most likely the reason behind carrier’s price surge today. After the first hour of trade Lufthansa has advanced 4.6%.
It is also worth to mention new developments in the E.ON (EOAN.DE) and Innogy case. Let us recall that E.ON wanted to acquire the RWE (RWE.DE) subsidiary but failed to get shareholders’ support for such action. According to Westdeutsche Allgemeine Zeitung report the E.ON may take another chance to take grip on Innogy assets. As acquiring 90% of Innogy shares in a takeover bid is getting less probable the company may consider merging with Innogy. However, such measure would be only implemented in case E.ON fails to acquire at least 90% of Innogy shares. After the first hour of trade E.ON has declined 0.03%.
After peaking at 31.25 euros at the beginning of the year the Lufthansa shares began to underperform. The stock declined to as low as 19.80 euros until it began to recover. Today’s stellar performance allowed carrier to overcome the mid term downward trendline and may be now eyeing to test the 38.2% Fibo level (24.195) of this year’s slump. Source: xStation5
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