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European stock markets erase early gains
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DE30 tests mix of support in 14,450 pts area
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Volkswagen to invest over €7 billion in EV supply chain in Spain
European stock markets launched today's trading higher but have erased gains since. UK FTSE 100 (UK100) is the only major European index that stays afloat, trading 0.3% higher on the day. Spanish IBEX (SPA35) is one of top laggards as it drops over 0.7% at press time.
The German IFO Institute released an updated set of economic forecasts. IFO Institute expects German GDP growth to reach 2.2-3.1% this year, down from 3.7% signaled in December's forecast. Simultaneously, the inflation forecast for 2022 was boosted to 5.1-6.1%, up from 3.3% in December's forecast. Prime reason behind deterioration of forecasts is of course Russian invasion of Ukraine that has severely disrupted European supply chains. Forecasts may deteriorate further should the EU go through with a total ban on Russian energy commodities.
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Source: xStation5
DE30 reached the highest level since the beginning of Russian invasion of Ukraine today, briefly trading above highs from March 16-17, 2022. Nevertheless, bulls failed to hold onto those gains and pullback was launched. Index erased all of morning gains and now trades slightly lower on the day. A look at the chart shows us that DE30 may have reached an important area - 14,450 pts zone marked with previous price reactions, 50-hour moving average and the lower limit of an upward channel. A break below this mix of support could pave the way for a deeper drop.
Company News
Volkswagen (VOW1.DE) announced that it plans to spend more than €7 billion in Spain to set up an electric vehicle supply chain in the country. Volkswagen will invest in an EV battery plant as well as a number of other suppliers. Volkswagen plans to have six EV battery plants in Europe by the end of 2030.
Analysts' actions
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Lanxess (LXS.DE) downgraded to "neutral" at Goldman Sachs. Price target set at €44.00
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Nemetschek (NEM.DE) upgraded to "buy" at Bankhaus Metzler. Price target set at €104.00
In spite of announcing ambitious investment plans, Volkswagen (VOW1.DE) is trading lower today. Stock is pulling back from a short-term resistance zone marked with 50% retracement of the post-pandemic upward move. If bulls manage to regain control and break above the aforementioned resistance, attention will shift to the €245.00 area, where the upper limit of the Overbalance structure can be found. Source: xStation5
