DE30: European indices pull back after Trump signs Hong Kong bill

• Stock market indices pull back as investors fear deterioration in Sino-US relations

• DE30 tests 200-hour moving average shortly after opening of cash session

• Deutsche Bank (DBK.DE) allegedly sold assets with $50 billion notional value to Goldman Sachs

Moods across the European stock exchanges are downbeat on Thursday as investors fear deterioration in Sino-US relations. The biggest declines can be spotted on Portuguese and Polish stock exchanges. On the other hand, blue-chips indices from Switzerland and Spain are trading slightly above yesterday’s closing prices. Telecoms and automotive companies lead losses on the Old Continent while real estate sector and retailers trade higher.

Source: xStation5

The German DE30 drifted below the 50-session moving average (green line) that has been limiting downward moves of the index recently. The index plunged at the beginning of Thursday’s cash session but found support at the 200-hour moving average (purple line, 13210 pts area). Buyers managed to recoup much of this drop later on but bears seem to remain in control. Midpoint of the trading range at 13225 pts, that coincides with the 100-hour moving average, is the first support to watch. Should the index break below, the 200-hour moving average may come into play once again. Upper limit of the trading range at 13300 pts remains the key resistance.

DAX members at the top of the first hour of cash session. Source: Bloomberg

Almost every DAX member is trading lower at the beginning of the Thursday’s session. The situation is an aftermath of singing of the Hong Kong bill by the US President Donald Trump as it risks deterioration in Sino-US trade relations. Automotive sector and IT stocks can be found among top laggards.

Reports surfaced yesterday saying that the Deutsche Bank (DBK.DE) managed to sell unwanted assets with a notional value of around $50 billion. Goldman Sachs  is said to be the buyer. If confirmed, it would be the second time the US investment bank decided to buy assets from the German lender that goes to great lengths to deleverage its balance sheet. Earlier, Goldman Sachs bought portfolio of Asia equity derivatives from the Deutsche Bank. Shares of the German bank jumped yesterday on the news but this gain was completely erased by now.

Deutsche Lufthansa (LHA.DE) can be found among DAX top laggards today as well. The German carrier is being pressured by risk-off sentiment as well as fine proposed by the US aviation authorities. The $6.4 million fine is reasoned with the fact that the carrier operated around 600 flights into San Diego and Philadelphia without required approval. Lufthansa has 30 days to respond.

After yesterday’s bounce higher, the share price of the Deutsche Bank (DBK.DE) turned lower once again. The near-term level to watch is the psychological €6.50 barrier that saw a few price reaction already. Source: xStation5