DE30: European markets try to recover after Monday’s slump

• European equities trade mixed on Wednesday, French index lags amid tariff threat

• DE30 tries to climb back above the low from November 21

• MTU Aero Engines (MTX.DE) leads DAX gains after two recommendation upgrades

European equities saw a mixed start to Tuesday’s session with indices from Western Europe trading higher and stocks from Eastern Europe lagging behind. UK FTSE 100 (UK100) is also trading lower while French CAC 40 (FRA40) struggles in the vicinity of Monday’s closing price as French luxury goods companies pull back amid tariff threat. 

Source: xStation5

DE30 broke below the lower limit of recent consolidation yesterday. The index tries to break above the low from November 21 at 13060 pts. Bulls have met some resistance there and one cannot rule a pullback in case, for example, Trump steps up tariff rhetoric during ongoing NATO summit. In such a scenario, there are a few support levels to watch. The first one can be found at the psychological 13000 pts handle while the second is marked by yesterday’s intraday low at around 12950 pts. However, when it comes to key support, one should focus on the 12680 pts handle - the lower limit of a wide Overbalance structure (yellow box). On the other hand, should the index break above the 13050 pts handle, the lower limit of a recently-broken consolidation range at 13150 pts will take the spotlight.

DAX members at  9:39 am GMT. Source: Bloomberg

Wirecard (WDI.DE) is trading higher today. The German payments company announced that it has reached an agreement with Playmobil. Wirecard will process e-commerce payments for the company across Europe.

MTU Aero Engines (MTX.DE) is the best performing DAX member today. The German industrial company received an upgrade at Bank of America Merrill Lynch. Recommendation for the stock was raised to “buy” from “neutral”. The company was also raised to “buy” yesterday at Vertical Research. Vertical placed a €265 price target for the stock.

Goldman Sachs reinstated coverage of Merck (MRK.DE). The bank issued a “sell” recommendation for the stock and set a price target of €94.

A pullback that Merck (MRK.DE) stock is experiencing has brought the share price of the company to the lower limit of the Overbalance structure at €103.35. Reaction to this hurdle will be crucial as a break lower would, in theory, signal a trend reversal. In case such a scenario materializes, investors should focus on psychological €100 handle that coincides with low from October 4. Source: xStation5