Summary
- Lacklustre start to the European session
- DAX (DE30) test 200-hour moving average
- Vonovia (VNA.DE) tries to recover from yesterday’s drop
In spite of an optimistic remarks on the US-EU trade relationship expressed yesterday by the US President Donald Trump, a bulk of the main European stock market indices started today’s session lower. Gains can be spotted on the Italian, Polish and Swedish bourses while shares in the United Kingdom and Russia underperform the most.
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DE30 is once again testing the 200-hour moving average (purple line). An attempt to break below this hurdle at the end of yesterday’s session ended in a failure and long lower wick of recent candlesticks hint that bulls are not giving up on the defense. In case an upward impulse is launched, the first near-term resistance can be found at 11700 pts handle - local overnight peak and 100-hour moving average (red line). Source: xStation5
Trump strikes optimistic tone on US-EU trade relationship
Donald Trump and Emmanuel Macron held the post-G7 joint press conference yesterday. Leaders of the world’s most industrialized countries touch on numerous topics but one seems to be especially important for Germany. Namely, Trump said that while the European Union is a tough partner for negotiations, progress is being made. The US President said that the US and EU may be able to reach a trade agreement without the need of imposing tariffs on the European cars. However, one should keep in mind that Trump is a hot-tempered person and may quickly make a U-turn in this case. The view seems to be reflected by market participants as carmakers failed to rally on the news and are trading mixed today.
DAX members at 8:40 am BST. Source: Bloomberg
Company News
Deutsche Lufthansa (LHA.DE) and EON (EOAN.DE) could be found among best performing DAX stocks in the first minutes of Tuesday’s session. Companies were trading higher following upgrades from analysts. Barclays raised rating for EON to “overweight” from “equal-weight” and price target was set at €9.50. Lufthansa had its recommendation raised at Kepler Cheuvreux to “buy” from “hold”. However, the German carrier erased all of the gains in the first hour of the session while EON continued to advance.
The Deutsche Boerse (DBK.DE) announced changes to the main German stock market indices. Following an idea of taking Axel Springer (SPR.DE) private, the German stock exchange operator decided to remove the media company from the MDAX index. Cancom, IT service management company, will fill in the vacancy. Apart from that, Instone Real Estate stock will be added to the small-cap SDAX index.
Vonovia (VNA.DE) was the leading stock in the index at the end of the first trading hour. The German residential property company experienced heavy sell-off yesterday on the back of the idea of imposing a rental-cap. Having said that, today’s advance may be just a short-lived correction.
