Summary:
- European equities trade higher in spite of decline
- DAX (DE30) eyes third test of the 12400 pts handle
- Deutsche Bank (DBK.DE) gets boost from Fed’s stress test results
Major stock market indices from the Old Continent are trading higher following two hours of Friday's session. The situation contrasts with the one spotted during the Asian session as most of the blue chips indices from that continent finished trading lower. Deutsche Bank leads DAX higher following an unexpected passing of Fed’s stress tests.
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile app
DAX (DE30) is eyeing another test of the 12400 pts handle. The German index failed to breach it twice over the past two months. However, with each subsequent test the probability of a break higher is increasing. Nevertheless, given that the G20 summit kicked off today, a break higher may be dependant on the outcome of the Trump-Xi meeting. In case the result is disappointing, a pullback towards the support zone ranging above the 12000 pts handle may be on the cards. Source: xStation5
Deutsche Bank gets boost from Fed’s stress test results
Deutsche Bank (DBK.DE) is the best performing DAX stock at the beginning of the final trading session of the week. The troubled German lender got boosted by the Federal Reserve as the US central bank announced results of the annual stress tests. Fed said that all 18 lenders that took part in the tests passed them. This is a huge win for the Deutsche Bank and its CEO, Christian Sewing, as the German lender had a track record or performing poorly or even failing previous tests. It was also expected by analysts’ that the Deutsche Bank will perform poorly this time as well therefore results are quite a major surprise. Apart from that, the German bank is benefiting from an upgrade it has received at the Kepler Cheuvreux. The financial services company raised recommendation for the stock from “reduce” to “hold”.
DAX members after the first two hours of trade. Source: Bloomberg
Other company news
According to the Handelsblatt report, management of the BMW (BMW.DE) decided to freeze any new hiring within the company. The German carmaker will not fill arising vacancies in case it is possible without disrupting operations. The move is said to be aimed at avoiding direct job cuts. The report has not been confirmed by the company yet but in case it is, it will show that BMW is serious about potential slowdown in auto sector. The company is trading slightly below yesterday’s close.
Traton, truck unit of Volkswagen (VOW.DE), debuted on the stock exchange in Frankfurt today. The IPO was priced at €27 per share and the stock launched its first trading day unchanged. Volkswagen raised €1.55 billion through listing, valuing Traton at €13.5 billion. In spite of listing Traton shares, Volkswagen is still a majority shareholder of the company, therefore company-specific news relating to Traton are likely to impact Volkswagen valuation as well.
BASF (BAS.DE), the German chemical company, announced that it will cut as much as 6000 jobs by the end of 2021. The company cited slowing demand for its chemicals in numerous industries, from cars to electronics. BASF is another German company, after Siemens (SIE.DE), that announced major job cuts this month.
Merck (MRK.DE) can be found among DAX biggest laggards today. The company is trading lower amid downgrade it has received at Bank of America Merrill Lynch. The stock saw its recommendation lowered from “neutral” to “underperform”.
Deutsche Bank (DBK.DE) stock opened significantly higher today and has found itself above the 50-session moving average (green line) for the first time since late-April 2019. However, recovery may be fragile in case it is not accompanied by upbeat news concerning Bank’s turnaround progress. Attack on the resistance zone ranging €7.10-7.30 cannot be ruled out but painting a higher high, and in turn invalidating downtrend structure, would require an upward move to the vicinity of €8.40 handle. Source: xStation5
