DE30: Stocks in Europe on the rise as new week gets underway

Summary:

• European equities gain a foothold at the beginning of the new week

• DAX (DE30) fails to break a resistance at its first attempt

• BMW (BMW.DE) rises following upbeat news from Hong Kong

Asian equities surged during the first trading session of the week. In Australia S&P/ASX 200 (AUS200) added 0.34% being the weakest major stock benchmark from the region. The Japanese Nikkei (JAP225) moved 0.92% higher despite JPY being the strongest currency from the G10 basket. However, it was China that steal the show on Monday morning as Hang Seng jumped 2.6%.

The optimism seen on the Asian bourses spread to Europe later on. Most of the stock indices from the Old Continent are trading higher in the first hours of the session. The biggest gains are observed on the Polish stock market as WIG20 (W20) index is rising as much as 1.6% at press time. On the other hand, Austrian and Italian blue chips benchmarks are the only ones to post declines. Car makers and retailers are benefiting the most from the ongoing push higher.

DE30 surged to test the neckline (12500 pts) of the recent head and shoulders pattern at the beginning of the European trading session. The benchmark failed to break above and in turn we saw it pulling back towards the upper limit of recently broken price zone. The reaction to the aforementioned zone may be decisive for the direction of price movement in the nearby future. Keep in mind that if the bulls are to weaken further the daily candlestick may take form of a pin bar and thus the outlook for buyers may deteriorate. Source: xStation5

Around a month ago Jean-Claude Juncker met with Donald Trump at the White House. The joint-statement hinting that the agreement was reached lifted equities on the Old Continent. Nevertheless, many market participants claimed that these were just empty-promises. However, it looks like the negotiations have finally begun. Emily Haber, the German ambassador to the United States, informed that a working group aimed at negotiating a trade deal began to work this week and that the US side is pushing for rapid results. Moreover, Haber said that the deal should be struck ahead of the European Parliament elections that are scheduled for May next year. Having both sides devoted to getting the deal done in a reasonable amount of time we may expect remarks concerning details of agreement to be surfacing from time to time in the upcoming months.

At 9:00 am BST the German Ifo business climate index for August was released. The headline reading beat expectations of 101.8 pts by coming in at 103.8 pts. The expectations subindex moved higher from 98.2 pts to 101.2 pts while the current assessment gauge advanced from 105.4 pts (revised higher from 105.3) in July to 106.4 pts in August. Such as reading is a nice change from the array of weaker readings of survey-based indicators we have seen lately suggesting that the industry professionals may be slowly shrugging off concerns connected to the state of international trade.

BMW (BMW.DE) surged after news of partnership with Chinese company being extended beyond 2028. Source: Bloomberg

Company News

One of the top performing DAX companies today is BMW (BMW.DE). News coming from Hong Kong may be viewed as one of the reasons behind such a good performance. Namely, Brilliance China Automotive Holding announced that its joint venture with the German carmaker will be extended beyond 2028. Let us recall that BMW Brilliance (joint venture of the two aforementioned companies) was founded in 2003 and its main operations focus on producing, distributing and selling the BMW cars on the mainland China.