DE30: Theresa May to face vote of no confidence today

Summary:

• Vote of no confidence in PM May to be held today

• DAX (DE30 on xStation5) pulls back from the vicinity of 10900 pts handle

• BMW (BMW.DE) and Daimler (DAI.DE) joint car-sharing company to start operating in early 2019

Following gains seen in Asian investors from the Old Continent launched Wednesday’s trading in upbeat moods. Sea of green can be spotted across the European quotation board with stocks from Russia being the sole laggards. Dutch shares gain the most followed by equities from France and Poland. IT and real estate stocks led gains in the first minutes of trade while retailers and builders underperformed.

The latest DE30 sell-off was halted in the vicinity of 10600 pts. The index managed to break above the semi-important resistance zone later on and almost visited the 10900 pts handle. Following higher opening the benchmark is moving lower since the beginning of the cash session. In case bulls manage to push higher once again, one cannot rule out Source: xStation5

When the UK Prime Minister Theresa May announced earlier this week that the Brexit vote in parliament will be postponed until at least January, one could expect the no major developments concerning this topic will surface until year’s end. However, one could not be more mistaken. Sir Graham Brady, the chair of the 1922 Committee, announced today that he received enough letters from the Conservative party MPs to trigger a vote of no confidence in Theresa May. This means that at least 15% of the Conservative MPs are dissatisfied with current Prime Minister’s doings and called for a leadership challenge. The vote will be held today between 6 pm GMT and 8 pm GMT. Votes will be counted immediately and result announced as soon as possible. This means that in case PM May does not receive backing of at least 158 Tory MPs today she will be ousted from the post of the Conservative Party leader and a more radical Brexiteer may take her place. While being ousted from the position of the party leader does not mean getting ousted from the Prime Minister post it is often the case that the latter follows the former. Having said that, in case May losses leadership vote today there is a risk that the one who takes her place will get negotiations and the whole Brexit process back to square one.

Major European stock market indices after the first hour of trade:

• DAX (DE30): +0.48%

• FTSE 100 (UK100): +0.40%

• CAC40 (FRA40): +0.86%

• IBEX (SPA35): +0.53%

• FTSE MIB (ITA40): +0.41%

German utilities surge on Wednesday altough no news concerning this sector surfaced recently. Source: Bloomberg

Company News

Allianz (ALV.DE) is one of the best performing DAX stocks today. The company received an upgrade at Bank of America Merrill Lynch. The company is now rated “buy” (previously “hold”). One-year price target was raised to €210.

Siemens (SIE.DE) and Alstom (ALO.FR) announced that they have agreed on which assets to sell to gain the EU antitrust approval on the merger of their rail operations. The companies will divest their signaling and rolling stock products divisions. Both divisions make up around 4% of revenue of the two companies combined.

Some time ago BMW (BMW.DE) and Daimler (DAI.DE) announced that they will merger their car-sharing operations. The combined car-sharing company will first operate in Berlin, Cologne, Dusseldorf and Vienna among other. The merger process was slowed down by the US antitrust authority but the companies said today that the joint entity will begin operating in early 2019.