DE30: Volkswagen develops an EV charging network in China

Summary:

• Italy’s Salvini tries to form an eurosceptic alliance ahead of the European elections

• DAX (DE30 on xStation5) paints a doji candlestick

• Volkswagen (VOW.DE) teams up with Chinese companies to develop a network of car charging stations

The US and Chinese authorities failed to provide public with any details of the recently concluded trade talks. Such an outcome spoiled moods on the global equity markets causing most of the Asian stock indices to move lower. In turn, similarly downbeat moods were observed at the beginning of the European trading. Polish, French and Belgian shares opened with the biggest downward price gap while Spanish stocks were the most resilient. Automobile companies and retailers were among the biggest underperformers in the first minutes of the European session.

Recent rally on DE30 (DAX futures underlying) was put to a halt yesterday as lack of details concerning US-China trade talks and prolonging US government shutdown dented moods on the global equity markets. DE30 painted a doji candlestick hinting at investors’ indecisiveness. However, as the benchmark reversed just a notch below the previous local high the index maintained a downtrend structure and may be set for more losses. Source: xStation5

Leader of the Italian League and the Italian Deputy Prime Minister, Matteo Salvini, travelled to Warsaw, Poland yesterday to hold discussion with some of the top politicians from the Polish governing party. The visit is a part of the Salvini’s European tour aimed at gathering support and potential allies ahead of the European elections scheduled for May. Salvini is said to be trying to convince populist parties from various parts of Europe to join him in forming an eurosceptic alliance that will reshape Europe. According to Salvini, talks with Polish authorities have gone well and politicians found somewhat common stance on issues like migration, EU border security or meddling of the Union in the domestic affairs of member countries. Among other potential allies on Salvini’s list on can find Marie Le Pen or Viktor Orban. Having said that, one may expected more news on the European populist alliance to surface in the upcoming weeks as the elections will be getting closer and closer. Note that the recent raise of populist in Europe was not big enough to give any single party enough power to reshape Europe alone but joint efforts may pay off and turn to be a hurdle for the current establishment in Brussels.

Investors from the Old Continent should stay on guard in the early afternoon (12:30 pm GMT) as the release of the EBC minutes may spur increased volatility on the European markets.

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

• DAX (DE30): -0.60%

• FTSE 100 (UK100): -0.46%

• CAC40 (FRA40): -0.91%

• IBEX (SPA35): -0.19%

• FTSE MIB (ITA40): -0.37%

Utilities outperform while most of the DAX stocks is trading lower. Source: Bloomberg

Company News

Volkswagen (VOW.DE) is trying to get ahead of its competitors in the thriving electric car industry. According to the recent Bloomberg report, the German carmaker teamed up with three Chinese companies in order to develop a network of fast-charging stations. A broad and deep network of charging stations may cause Chinese consumers to prefer Volkswagen cars to the other brands. The whole project is said to cost as much as €4 billion with Volkswagen owning 30% of it.

Osram (OSR.DE), the German lightning company, announced that it will buy up to 9.5 million own shares during the first tranche of the share repurchase programme. Company plans to spend up to 225 million euro. The programme begins today and is said to last until 10 November.

BASF (BASF.DE) is one of the few DAX members that prove to be somewhat more resistant to the downward pressure. The stock was boosted by an upgrade it has received at JPMorgan. The Bank raised the recommendation for BASF from “neutral” to “overweight”. One-year price target was set at €74, implying a 16% increase against yesterday’s close.