DE30 plummets and tests 12300 pts handle

• DE30 plummeted after release of PMI data for September

• Deutsche Bank (DBK.DE) completes a deal with BNP Paribas (BNP.FR)

• Lufthansa (LHA.DE) resists downward pressure thanks to Bankhaus Metzler upgrade

Weakness could be spotted at the beginning of Monday’s trading on the Old Continent. However, the situation got much worse following release of PMI data from Germany and France. Manufacturing continues to be lacklustre while services data deteriorated significantly. In turn, declines can be spotted on indices all across the Old Continent.

Source: xStation5

DE30 struggled to gain traction in the previous week. The German index seesawed in the vicinity of the resistance zone ranging above the 12420 pts handle. The benchmarked opened the week in the vicinity of the lower limit of the aforementioned zone but plummeted once PMI data from France and Germany was released. Price broke below the 33-period exponential moving average that served as the lower limit of the recent trading range. The index is testing the 12305 pts handle at press time, that marked the previous week’s low. Note that in case the declines deepen there is a risk of breaking below the lower limit of the Overbalance structure (12115 pts). In such a scenario, the bullish setup would be invalidated and outlook would begin to favour sellers.

DAX members at 8:48 am BST. Source: Bloomberg

Deutsche Bank (DBK.DE) completed a deal on transfer of prime brokerage business to BNP Paribas (BNP.FR). The transfer will include assets, staff as well as technology and is likely to be completed over several stages. Until it is completed, the Deutsche bank will continue to operate the platform for its clients. The deal seems to be beneficial for both banks as it helps Deutsche Bank steer further away from equities trading and grants bigger scale for BNP’s hedge fund business. 

Vonovia (VNA.DE), the German real estate company, announced that will purchase an over 60% stake in Hembla, the Swedish real estate firm, from Blackstone. The transaction value is 12.2 billion SEK, or 215 SEK per share. Hembla owns over 21 thousand flats in Sweden and the acquisition is in-line with Vonovia’s expansion strategy.

BMW (BMW.DE) received an upgrade at the Bankhaus Metzler. Analysts of the Bank raised recommendation for the stock from “hold” to “buy”. Nevertheless, shares are failing to catch a bid at the beginning of a new week and are trading lower.

Lufthansa (LHA.DE) also received an upgrade at Bankhause Metzler. In this case the recommendation was raised by two notches, from “sell” to “buy”. The German carrier is the best performing DAX member after the first hour of trade.

Vonovia (VNA.DE) rallied around 5% last week. However, continuation of the upward move may be under question as the stock reached two key obstacles - 200-session moving average (purple line) and the medium-term resistance zone (red rectangle). Source: xStation5