DE30 pulls back from YTD highs

• European equities move lower after mixed opening

• DE30 struggles near late-July peak

• Wacker Chemie (WCH.DE) slumps after cutting full-year forecasts

Major European stock market indices opened mixed on Wednesday. However, majority of them slipped below yesterday’s closing prices after the first half an hour of trading. Belgian and Spanish shares underperform the most while the UK FTSE 100 (UK100) is among a few indices to stay afloat today. Retailers and financial services providers can be found among the worst performing groups of stocks.

Source: xStation5

DE30 broke above peak from early-July yesterday and painted a fresh YTD highs. The index pulled back later on but still remains close to the July’s high. In case upbeat moods prevail, the attention will shift to the 12825 pts handle - local peak from the turn of July and August 2018. As the latest correction was quite a major one, the Overbalance methodology does not hint at trend reversal prior to a decline below the 12000 pts handle. In turn, technical situation seems to favour bulls. However, as the German data is poor, we can rule that current gains are sentiment-driven. Having said that, one should keep in mind that any negative trade- or Brexit-related headlines could spoil moods and push the index lower. In such a scenario, the zone ranging above the 12450 pts handle should serve as the first major support.

DAX members after the first half an hour of the session. Source: Bloomberg

Swiss airline owned by Deutsche Lufthansa (LHA.DE) grounded all of its Airbus A220 jets after “serious” engine problem caused forced landing yesterday. Some airplanes already returned to service when inspection found no major problems. Full operations are expected to be resumed on Thursday. Airline had to cancel around 100 flights on Tuesday due to the issue.

Wacker Chemie (WCH.DE), chemical company headquartered in Germany, announced a cut to its 2019 forecasts yesterday. The company now expects full-year EBITDA to decline 30% while earlier it expected a decline in the 10-20% range. Sales growth is expected to be flat this year while free cash flow should be “clearly positive” but lower than a year ago. The company is the worst performing SDAX member at the beginning of Wednesday’s trading.

Munich Re (MUV2.DE) received an upgrade at Commerzbank. Recommendation for the German reinsurance company was raised from “hold” to “buy”. Price target was set at €265, implying 7.7% increase against yesterday’s closing price.

Infineon (IFX.DE) launched today’s trading lower following a downgrade at Societe Generale. Recommendation for the stock was lowered from “hold” to “sell”. Price target was set at €15.50, implying almost 9% decrease against yesterday’s closing price.

Hugo Boss (BOSS.DE) also received a downgrade. Recommendation for the stock was lowered from “buy” to “hold” at LBBW Bank. Price target was set at €40, around 8% above yesterday’s closing price.

Infineon Technologies (IFX.DE) failed to break above the €17.13, marked with the local low from late-March. The stock tested €16.50 handle, marked with local low from turn of 2018 and 2019, in today’s early trading but the bears did not have enough steam to break lower. Note that the 50-session moving average (green line) can be found slightly lower. Having said that, the €16.50 area could constitute a significant support. Bounce higher and break above the €17.13 handle would pave the way towards the key resistance - 200-session moving average (purple line). Source: xStation5