DE30 bounces 200 points off daily lows

• European stock markets are trading lower

• DE30 bounces 200 points off the daily lows

• Allianz will not sell insurance to Russian businesses

European stock market indices trade lower on Tuesday, following a downbeat Wall Street session yesterday and another day of heavy selling in China today. While German DAX managed to bounce more than 200 points off the daily lows, the index continues to trade 1% lower on the day. Polish WIG20 (W20) is one of a few European indices that manages to stay afloat with a 0.2% gain.

German ZEW index for March was released at 10:00 am GMT. Headline economic sentiment index plunged from 54.3 to -39.3. While the market expected a drop, it expected a drop to +10.5. In a commentary to the release, ZEW explained that recession is becoming more and more likely. Economists noted that deteriorating economic expectations are accompanied by soaring inflation expectations and therefore a period of stagflation - low growth and high inflation - cannot be ruled out.

Source: xStation5

Stock market indices are very volatile as of late. However, this volatility did not translate into a bigger price moves in either direction but rather a volatile sideways move. A look at the DE30 chart shows that the index has been trading sideways in 13,300-14,050 pts range recently. Nevertheless, there are some signs that a large move may be looming. The index dropped below a short-term upward trendline that has limited downward moves over the past 2 weeks. In case this downside breakout is followed by deepening of the downward move, the two levels to watch are 200-hour moving average (purple line, 13,470 pts area) and support zone ranging below 13,300 pts.

Company News

Allianz (ALV.DE) joined other major financial firms in winding down its business in Russia. Allianz announced that it has stopped selling new insurance policies to businesses in Russia and decided not to invest in Russia. 

Herbert Diess, CEO of Volkswagen (VOW1.DE), said that war in Ukraine has made the 2022 outlook very uncertain. Executive said that it started to prioritize production in China and the United States amid supply chain issues in Europe. However, the executive also said that the company is building up additional harness wiring capacity in Europe to tackle problems.

Analysts' actions

• Zalando (ZAL.DE) upgraded to "buy" at Exane. Price target set at €52.00

Allianz (ALV.DE) launched today's trading lower but has managed to recover a big part of its losses already. Nevertheless, stock is still trading 1% lower on the day. Note that the stock is to a huge extent following performance of DAX index (DE30, light blue overlay). Source: xStation5