DE30: BMW cannot fully absorb duties imposed on imported cars

Summary:

• Japanese traders drop European bonds

• DAX (DE30 on xStation5) approaches the 12600 pts handle

• BMW (BMW.DE) to review its car pricing in China due to tariffs

Investors in Asia launched the week in clearly good moods as major equity indices from the region are trading significantly higher on Monday. Despite flood hitting Hiroshima area and causing some industry plants to be shut down Japanese Nikkei (JAP225) added 1.21%. In China Hang Seng (CHNComp) is trading over 1.5% higher while in Australia S&P/ASX 200 (AUS200) closed 0.22% higher.

Upbeat moods were also seen on the Old Continent. Major stock benchmarks from the region opened higher after weekend. Equities from Russia and Poland are outperforming their other European peers. Miners are the best performing European stocks on Monday morning followed by refiners and builders. The only Euro Stoxx 600 sector subindex to open lower consists of utility stocks. Japanese investors seem to be concerned about the condition of the European economies. In the morning nation’s balance of payments data was released. In May traders from Japan sold the biggest stake of the German debt ($6.3 billion) in three years. Moreover, this was the first month since August last year when Japanese investors reduced their position in French bonds. Adding to that the biggest sale of Italian bonds in at least half a year we are getting not so rosy picture of the EMU economy.

Today’s calendar looks empty what is usually the case for Mondays. Mario Draghi’s speech in the European Parliament (2:00 pm BST) seems to be the sole event worth watching today. Meanwhile, we encourage you to take a look at our weekly calendar review available here.

Major European stock markets after first hour of trade:

• DAX (DE30): +0.45%

• CAC 40 (FRA40): +0.7%

• FTSE 100 (UK100): +0.35%

• IBEX 35 (SPA35): +0.45%

• FTSE MIB (ITA40): +0.5%

DE30 is eyeing a test of the resistance level at 12600 pts. Source: xStation5

After few unsuccessful attempts to break below the support level at 12150 pts (orange circle on the chart above) DE30 marched higher. The German index smashed through the 33-period moving average on H4 interval on Thursday and after a brief pullback it is now trading above the 12500 pts handle. Having in mind that DE30 often closes the price gaps made during an opening a pullback towards 12505 pts may be on cards. In case the upward momentum prevails we may see a test of the key resistance level at 12600 pts in the upcoming hours.

Despite another issue related to the diesel engines Daimler (DAI.DE) is posting decent gain on Monday morning. Source: Bloomberg

Company News

The ongoing trade dispute between China and US continues hitting the European carmakers. BMW (BMW.DE) announced today that it will not be able to fully absorb new duties levied on cars from US imported to China. Having said that, the company’s Chinese branch is calculating necessary prices increases which are to be announced later. After the first hour of trade BMW has added 0.3%.

Daimler (DAI.DE) announced that it has halted supplying one type of diesel engine. The decision was made after the company found out that there might be a technical issue that may result in higher-than-permitted nitrogen oxide emissions. Daimler said that it is currently in talks with the German automobile industry watchdog KBA to resolve the issue. The mentioned type of engine was used in European Mercedes-Benz models until 2013. After the first hour of trade Daimler has traded over 0.6% higher.

Daimler (DAI.DE) rebounds from its 2-year low at 54.80. The stock is trading just a notch below resistance level at 59.05 and at the lower bound of the downward channel. A break above may pave the way for a longer upward movement. Source: xStation5