DE30 drops below 15,400 pts as sell-off continues

• European stock markets trade lower

• DE30 drops below 15,400 pts

• Commerzbank taken €400 million hit from mBank provisions in Q4 2021

European indices trade lower at the beginning of a new week, reacting to another day of heavy selling on Wall Street on Friday. Major indices from Europe are all trading over 1% lower with German DAX (DE30), Spanish IBEX (SPA35), French CAC40 (FRA40) and Dutch AEX (NED25) dropping around 1.5%. Russian equities are top underperformers with RTS (RUS50) dropping 6% on rising tensions in the Eastern Europe.

Source: xStation5

DE30 continues to move lower and is now trading more than 5% below its all-time highs. The German index is attempting to deliver a more decisive break below the 15,400 pts handle at press time. So far it looks like sellers may succeed and if this is so, the next major support to watch can be found in the 15,080 pts area. Better-than-expected flash PMIs for January provided only a brief support and the index started to move lower soon afterwards. There are two things for equity investors to watch this week. The first one is the FOMC meeting on Wednesday while the second is tensions in the Eastern Europe.

Company News

Commerzbank (CBK.DE) said that its Q4 2021 earnings will be severely affected by a provision at its Polish unit, mBank. The German lender said that its net results for the final quarter of 2021 will be lowered by around €404 million in provisions for FX-related loans at mBank.

Peter Schiefer, head of the automotive unit at Infineon Technologies (IFX.DE), said in an interview with Automobilwoche that he expects chip shortage to end in 2023.

According to a Reuters report, Lufthansa (LHA.DE) is in talks with Italian state-owned ITA Airways over purchase of 40% stake in the airline. One of the sources asked by Reuters said that the deal could be announced within a week or two.

Analysts' actions

• Siemens Energy (ENR.DE) downgraded to "hold" at HSBC. Price target set at €20.00

• Allianz (ALV.DE) rated "buy" at Jefferies. Price target set at €265.00

Commerzbank (CBK.DE) is attempting to make a break below the lower limit of a recent short-term trading range at €7.35. A break below would pave the way for a test of the €7.22 area, where the 200-hour moving average and 38.2% retracement of a recent upward impulse can be found. In case bulls fail to defend this area, the next major support can be found at the lower limit of the Overbalance structure near 61.8% retracement. Source: xStation5