DE30: European equities push higher on the final trading day of the week

Summary:

• Mark Carney expressed remarks concerning post-Brexit outlook

• DAX (DE30 on xStation5) moves above the 33-period moving average

• Bayer (BAYN.DE) surges after upbeat Baader report

Yesterday’s session on Wall Street was marked by optimism with S&P 500 climbing back to the vicinity of its ATH and other major indices also pushing higher. Upbeat moods were also observed during Asian trading with the Australian S&P/ASX 200 (AUS200) adding 0.60% and the Japanese Nikkei (JAP225) closing 1.19% higher. On the other hand, Chinese indices were trading mixed.

Major European stock indices opened higher on Friday benefiting from gains accounted during yesterday’s US and today’s Asian sessions. 18 out of 19 sector subindicies from the Euro Stoxx 600 index opened higher on the final trading day of the week with miners and technology companies being the leaders. Utility stocks were the only group to launch today’s session lower.

DE30 (DAX futures underlying) moved above the 33-period moving average (green line) yesterday and is trading in the vicinity of late-June’s swing level (orange circle). Morning surge was halted around 12130 pts handle but in case the aforementioned moving average is used as a support by buyers repeated upward move toward 12150 pts handle may be on cards. Source: xStation5

With Brexit being one of the most important issues in European politics today it is worth highlighting some remarks from Bank of England Governor Mark Carney concerning the post-Brexit outlook of the UK economy. According to The Times report, the UK central banker said during meeting with ministers that in case no Brexit deal is worked out until country breaks away from the European Union next year housing market in the UK may take a severe hit. Namely, Carney claims that in such scenario house prices may fall by as much as 35% over the three year timespan.

Apart from that, Bloomberg reports that during the same meeting Carney said that no-deal Brexit may result in interest rate hikes. This is quite interesting given that hard Brexit could cause slowdown in the UK economy and in such case the country could use stimulus from lower rates. Recall, that Bank of England delivered a preventative rate cut to 0.25% in the aftermath of Brexit referendum to offset potential slowdown in economy. After a year BoE raised rates to the previous 0.50%.

Major European stock benchmarks after the first hour of trade:

• DAX (DE30): +0.32%

• FTSE 100 (UK100): +0.17%

• CAC 40 (FRA40): +0.38%

• IBEX (SPA35): +0.28%

• FTSE MIB (ITA40): +0.40%

Bayer (BAYN.DE) is one of the best performing DAX stocks after upbeat Baader report. Source: Bloomberg

Company News

Bayer (BAYN.DE) can be found among DAX leaders today. Good performance of the stock can be ascribed to the report issued by Baader Bank. The Bank’s analysts confirmed “buy” rating for the company saying the management change in pharmaceuticals division in the late-August is positive. Baader claims that new head of the division, Stefan Oelrich, is capable of handling stress situations. Moreover, the Bank hails company’s conviction to follow its strategy, including acquisitions. Baader additionally claimed that as Bayer’s valuation is way below its long term average as well as it peers it is crucial for the management not to engage in conflicts with strategic and activist investors.