DE30 tests 11,600 pts as optimism wanes ahead of weekend

• Stocks pull back ahead of Trump's press conference

• DE30 tests 11,600 pts

• Volkswagen (VOW3.DE) said demand in China may have recovered to 2019 levels

European stocks are taking a step back during the final trading session of the week. Donald Trump announced he will hold a press conference on China today and investors are afraid he may escalate tensions. Given that weekend is just around the corner, we may see some profit taking throughout the day.

Germany invites social media companies amid Trump's anger

Thomas Jarzombek, member of German Bundestag and head of parliament's commission responsible for start-ups and digital economy, invited Twitter to move its headquarters to Germany. Invitation came amid Trump's criticism of social media companies and potential regulatory action in the United States. However, even if Trump acts to the detriment of social media companies, those companies are likely to challenge his actions in court first rather than flee abroad instantaneously.

Source: xStation5

DE30 painted a double top pattern in the 11,800 pts area (orange circle) and started to pull back. Index broke below 50-session moving average (green line) and is now testing 61.8% retracement of February-March sell-off near 11,600 pts. Breaking below this hurdle could see DE30 accelerate downward move. Trump's presser later in the day could be a catalyst for the break. An important support zone can be found ranging below 11,250 pts and it is additionally strengthened by a 200-hour moving average (purple line). Note that timing of the presser is still uncertain and in case Trump wants to deliver bad news for the markets, he may hold a presser after Wall Street closes for the weekend (he has done so previously). In such a scenario, we would have to wait for markets' reaction until the launch of a new week.

DAX members at 10:07 am BST. Source: Bloomberg

Tesla (TSLA.US and TSLA.DE) is facing a legal challenge over its German plant. Community from the area, where the factory will be built, plans to sue the company for starting work without necessary permission. However, even if the company is taken to court and suffers a setback it is likely to be a minor one given that German authorities are in favor of Tesla setting the European factory in Germany.

Volkswagen (VOW3.DE) said that demand in China this month could match previous year's level. Company's chief in China said that the country has seen super-fast recovery in demand and that while W-shaped recovery is still an option, V-shaped seems more likely.

Allianz (ALV.DE) bought a portfolio of multi-family residential properties in Tokyo through its real estate subsidiary. Deal is worth €110 million. The company also acquired a similar portfolio worth €1.1 billion in November 2019 (with assets spread across Japan).

Analyst actions

• Continental (CON.DE) was cut to "equal-weight" at Morgan Stanley. Price target was set at €95

• Hugo Boss (BOSS.DE) was cut to "hold" at Jefferies and DZ Bank. Jefferies set price target of €27 while DZ Bank set price target of €28

Continental (CON.DE) halted recovery near 61.8% retracement of February-March sell-off. The stock is trading lower today following a downgrade at Morgan Stanley. Near-term support can be found in the €86 area, where one can find upward trendline and 50-hour moving average (green line). Source: xStation5