DE30: European markets slide as virus concerns return

• European indices move lower as coronavirus concerns return

• DE30 attempts to hold above support at 13440 pts

• Hochtief (HOT.DE) sinks on Cimic Group writedown and dividend suspension

European stocks started Thursday’s trading lower as concerns over coronavirus outbreak returned to the markets. However, major indices try to recover. Italian FTSE MIB (ITA40) stands out among region benchmarks as it gains almost 0.6%. A potential risk event and market mover for European assets today is the ECB rate decision (12:45 pm GMT) and Lagarde presser (1:30 pm GMT).

EC President may visit Washington next month

Stavros Lambrinidis, the EU ambassador to the United States, said that Ursula von der Leyen, the President of the European Commission, may visit Washington in early February. While he did not specify what the visit could be about, it is hard not to link it to EU-US trade. Let us recall that Donald Trump had a “very good” conversation with von der Leyen in Davos and that the United States hope to finalize EU-US trade deal ahead of November’s elections. Stakes are high as Trump warned that in case he does not get a fair deal with the EU, he will impose car tariffs. In case the visit is about trade, one may expect cars and digital taxes to be discussed.

Source: xStation5

DE30 continues to pull back after painting a fresh record high yesterday. The German index dipped below the lower limit of the Overbalance structure today (yellow box) but managed to climb back above it later on. Staying above this hurdle by the end of the session could help DE30 preserve an uptrend. However, upward moves seem to be limited by recent local low at 13465 pts. Failure to close above the 13440 pts mark would mean that the short-term trend has shifted, at least in theory. In such a scenario, the first near-term support to watch can be found at the zone ranging around 38.2% Fibo level of the upward move started on January 6 (13370 pts). 

DAX members at 9:43 am GMT. Source: Bloomberg

Deutsche Lufthansa (LHA.DE) is said to be considering listing of a jet-maintenance business. The move will fund unit’s expansion and will help increase market value of the airline group. The German carrier is also considering spin-off to shareholders but IPO is said to be a more likely option for now. News comes from Bloomberg report and has not been confirmed by Lufthansa yet.

Deutsche Bank (DBK.DE) gains amid speculation that the German lender may suspend bonuses for the management board.

Hochtief (HOT.DE) is the worst performing MDAX member today and sinks over 8%. Plunge was triggered by an announcement from the company's subsidiary, Cimic Group. Cimic said that it will withdraw from the Middle East and suspend a dividend payment. The decision came after Cimic booked a A$1.8 billion writedown on failed equity investment.

Volkswagen (VOW3.DE) was fined C$196.5 million ($150 million) by the Canadian court for importing tens of thousands of vehicles with rigged emission software. 

Analyst actions

• Continental (CON.DE) cut to “neutral” at Citi. Price target set at €112 

• Munich Re (MUV2.DE) cut to “hold” at Commerzbank. Price target set at €275

Hochtief (HOT.DE) launched today’s trading with a massive downward price gap. Plunge came after the company’s subsidiary decided to suspend dividends and booked a major writedown. The stock tested and defended price zone at €108 and is making its way back above the 200-session moving average (purple line). Source: xStation5