DE30: European stock rally fades

• European rally fades, DAX trades lower

• DE30 tries to hold above 11,000 pts

• ThyssenKrupp (TKA.DE) mulls divesting from more units

European stocks rallied yesterday on vaccine hopes and the EU stimulus idea. France and Germany agreed on a €500 billion budget that will be used to help European economy recover. However, the idea must be approved by all members of the bloc before it goes live. Elsewhere, Moderna said that its Covid-19 vaccine showed promising results in early tests. Upward move was continued overnight but the rally eased following European cash sesion open. 

Source: xStation5

DE30 broke not only above the 10,250-10,750 pts trading range we have been following for some time but also above the 11,000 pts handle. The index, however, did not manage to retest late-April highs as a pullback started following the European cash session open. Bears are trying to push the index below 11,000 pts but support in the area is strong. Should bulls manage to defend it, an upward impulse could be launched. In such a scenario, the resistance to focus on will be late-April peak at 11,325 pts. However, a break below 11,000 pts could see downward move accelerate. The first support to watch in this case will be a 10,750 pts swing level.

DAX members at 10:06 am BST. Source: xstation5

European Automobile Manufacturers Association released monthly car sales data for April. Combined sales within the EU, European Free Trade Association and the United Kingdom reached 292,182 units. That is a drop of 78% year-over-year! Every country registered a decline with Germany being hit "the least" - 61% YoY decline. Sales in Spain dropped to just 4,100 units, marking a 97% YoY drop. European car sales are about 40% down year-to-date.

ThyssenKrupp (TKA.DE) continues to look at sales of its assets in order to survive through the coronavirus pandemic. The company is said to be mulling the sale of steel and submarine units. Both units were making losses and company plans to focus on higher-margin segments. Let us recall that ThyssenKrupp has already sold its elevator unit for €18 billion.

FAZ journalist saw an internal memo sent to TUI (TUI.DE) employees. In a paper the company said that "structurally weaker" units can no longer be supported and should reorganize. In case loss-making units cannot reorganize to achieve profitability or cost reduction, the company warned that it may have to sell or discontinue operations of these units.

Financial Times came up with another piece on Wirecard (WDI.DE). FT claims that the German accounting watchdog launched an investigation into Wirecar last year after a whistleblower complaint was filed. Both accounting watchdog and BaFin declined to comment on whether the probe was launched.

ThyssenKrupp (TKA.DE) trades higher today thanks to general improvement of moods and reports saying it plans to divest from loss-making units. The stock is attempting to break above the resistance zone at €5.30. Note that this zone is additionally being strengthened by the 200-hour moving average (purple line). However, upper wicks of recent hourly candlesticks suggests that bulls may be losing steam. Source: xStation5