DE30: European indices trim early gains

• European stocks markets trade higher

• DE30 with failed attempt of breaking above 14,240 pts area

• Siemens Energy offers to buy Gamesa for €18 per share

European stock markets are trading higher at the beginning of a new week. However, a big part of the gains have been erased already. Blue chips indices from French, Italy and Belgium trade lower while other Western European benchmarks trades up to 1% higher. Polish WIG20 (W20) is top performer as it gains almost 2% at press time.

German IFO index for May, released at 9:00 am BST, was the only noteworthy European data print scheduled for today. Report turned out to be better-than-expected with the headline Business Climate index improving from 91.8 in April to 93.0 in May (exp. 91.4). This improvement was driven primarily by better reading of the Current Assessment subindex, which improved from 97.2 to 99.5 (exp. 96.8). Expectations subindex jumped from 86.7 to 86.9 (exp. 86.5). 

Source: xStation5

DE30 launched new week's trading with a bullish price gap. However, a test of the resistance zone ranging in the 14,240 pts area, that occurred at the beginning of the European session, turned out to be a failed one. Index erased a bulk of today's gains and is currently testing a 200-period moving average on H4 interval as a support (purple line). Note that this moving average lies just slightly above the support zone ranging around 38.2% retracement of the early-March upward move, that also acted as a swing area in the past. Having said that, a pullback below those two hurdles - moving average and Fibonacci retracement - may be a strong bearish signal. In such a scenario, the attention may shift to the next retracement in line as a potential support - 50% retracement in the 13,700 pts area.

Company News

Dominik Asma, CFO of Airbus (AIR.DE), said in an interview with Financial Times that the planemaker plans to amass €10 billion as a buffer for future crises as well as to be ready to build new types of aircraft. Company also plans to increase the monthly production capacity of A320 aircraft from 50 to 75 per month by 2025.

Siemens Energy (ENR.DE) announced a takeover offer for the remaining shares of its subsidiary Siemens Gamesa (SGRE.ES). Siemens Energy offers €18 per share of Gamesa, representing a 7.5% premium over Friday's closing price. Siemens Energy currently owns 67% stake in Gamesa but the company said that acquiring full control will help it solve problems at wind turbine making subsidiary faster.

Merck KGaA (MRK.DE) announced that it will invest around €440 million in expansion of its Irish operations. Company said that it will boost membrane manufacturing capacity as well as build a new manufacturing plant in Cork.

Analysts' actions

• Commerzbank (CBK.DE) upgraded to "buy" at Societe Generale. Price target set at €9.00

Siemens Energy (ENR.DE) launched today's trading higher but the initial upward move was stopped by the 200-hour moving average and resistance zone ranging around 38.2% retracement of downward impulse launched at the beginning of April. Stock erased all of today's gains later on and is now looking towards a test of the 23.6% retracement as a support. Source: xStation5