Summary
- DAX (DE30) tests 50- and 200-hour moving averages
- Germany changes frequency auctions accounting rules
- Cypress Semiconductor shareholders approve merger with Infineon (IFX.DE)
European shares are trading lower in the first hours of Wednesday’s session. The UK FTSE 100 (UK100) index is the exception among the blue chip indices from the Old Continent as it is being buoyed by GBP weakening. Elsewhere, Italian and French equities are taking the biggest step back.
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DE30 managed to bounce higher in the first part of yesterday’s session and touched the resistance zone ranging above the 11775 pts handle. Nevertheless, bulls lost steam later on and the index moved below the 100-hour moving average. 50- and 200-hour moving average are being tested today and in case they fail to fend off the bears, a downward move towards the short-term support at 11615 pts may be on the cards. Source: xStation5
Calculation method shift inflates German budget surplus
Germany has revised its budget balance figures. The revision was due to the change in the calculation method proposed by Eurostat. The change mostly relates to the way of accounting for mobile phone licenses. Previously all the proceeds from frequency auctions were record in a year in which the auction took place. Now, they will be evenly spread across the length of the license. This is only an accounting change therefore it should not have much of an impact on markets, especially as revised figures barely impacted GDP numbers. However, following the revision, the German budget surplus is even bigger. In turn, more pressure may arise in Germany for the government to abandon no-deficit rule and boost spending in order to save the economy from falling into recession.
DAX members at 9:57 am BST. Source: Bloomberg
Company News
It seems that each and every week investors are getting new reports concerning cost-cutting measures discussed at the Deutsche Bank (DBK.DE). According to a recent Bloomberg report, the German lender is considering centralizing its retail headquarters. Right now the Deutsche Bank has retail headquarters spread across a few German cities. Frankfurt was proposed as the head office of retail operations.
Shareholders of Cypress Semiconductor (CY.US) gave green light for planned takeover of the company by the German Infineon Technologies (IFX.DE).
MTU Aero Engines (MTX.DE) can be found among the worst performing stocks in the MDAX index on Wednesday morning. The company received a downgrade at HSBC. The Bank lowered recommendation for the stock from “buy” to “hold” and set a price target of €253.
