DE30 tests 12,600 pts after OECD projections

• European markets slip after OECD forecasts

• DE30 tests 12,600 pts

• Cerberus wants two seats at Board of Commerzbank (CBK.DE)

European stock markets launched trading higher on Fed decision day. However, lacklustre projections from OECD gave bulls some second thoughts. Major indices from Europe are trading near yesterday's closing prices at press time.

OECD expects deep contraction in global GDP this year

OECD published updated forecasts for the global economy today. Previous forecast was released in March and pointed to 2.4% GDP growth in 2020. The Organization now projects a 6% decline in the global economy this year. However, should a second wave of Covid-19 infections occur, GDP could contract as much as 7.6% in 2020. Economy of the euro area is expected to contract 9.1% in one-wave scenario and 11.5% in two-wave scenario. The United States economy is seen shrinking 7.3% in one-wave scenario and 8.5% in two-wave scenario. However, all major economies except Japan are expected to return to growth in 2021. Release started a pullback on DAX. 

Source: xStation5

DE30 did not manage to recover from yesterday's declines. We have observed a pick-up during Asian trading hours but index remains below post-pandemic higs. Note that the index failed to break above the 50-hour moving average in the morning (green line on the chart above) and has turned lower later on. Near-term support can be found ranging around 78.6% retracement of February-March drop (12,560 pts). Note that it is the Fed decision that is likely to decide whether the index breaks below or not. Should it do so, major support can be found at 11,800 pts. 13,000 pts mark is the resistance to watch. 

DAX members at 9:44 am BST. Source: xStation5

Cerberus Capital Management is seeking two seats at the Board of Commerzbank (CBK.DE) as asset manager is dissatisfied with turnaround efforts made at the German lender. Cerberus holds 5% stake in Commerzbank. Commerzbank's Supervisory Board is set to meet today and Ceberus' demand may be discussed.

James von Moltke, CFO of the Deutsche Bank (DBK.DE), expects a big increase in loan provisions in Q2 2020. During a virtual conference von Moltke said he expects provisions to stand at around €800 million for the April-June period. This would be the highest increase since Q2 2009. Median forecast compiled by Bloomberg points to €630 million in provisions. Nevertheless the CFO said that he expects provisions to start declining from Q3 2020.

Adidas (ADS.DE) announced that 30% of new positions in the United States will be filled with Black and Latinx people. Adidas is another company that decided to strengthen ethnic mix in its workforce in an attempt to better understand the US community.  The move comes amid Black Lives Matter protests in the US.

Analyst actions

• MTU Aero Engines (MTX.DE) cut to "hold" at HSBC. Price target set at €170

• BASF (BAS.DE) cut to "sell" at M.M. Warburg. Price target set at €52

• Zalando (ZAL.DE) cut to "neutral" at Invest Securities. Price target set at €61

Commerzbank (CBK.DE) halted the rally yesterday. The stock reached a 200-session moving average (purple line) that coincides with 50% retracement of February-March slump and lows from the second half of 2019. Note that a bearish engulfing pattern was painted yesterday therefore declines may be on the cards. Source: xStation5