Summary:
- Volkswagen surges on Ford alliance details
- DAX (DE30) pulls back after touching 100-hour moving average
- Lufthansa CEO criticizes cheap airline tickets
Moods in the first hours of the European session were quite mixed. The German, Dutch, Italian and Belgian equities trade higher while stocks from France, The United Kingdom or Spain dipped below their Friday’s closing prices.
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DE30 managed to break above the downward sloping trendline in today’s pre-session trading. The German index surged thanks to better-than-expected Chinese data. However, the upward impulse was halted at the 100-hour moving average (red line). The index quickly erased the gain later on and is now trading slightly above Friday's close. 12275 pts handle can be seen as the first near-term support level to watch. Source: xStation5
Volkswagen and Ford Motor expand alliance
Just as it was expected, executives of Volkswagen (VOW3.DE) and Ford Motor (F.US) unveiled details of the expanded alliance on Friday. The two companies have cooperated on commercial vehicles and pickups but now the alliance extends to autonomous and electric vehicles. Volkswagen will invest in Ford’s start-up that develops self-driving technology. In return, Ford will use electric car parts manufactured by Volkswagen. The move may help companies endure a period of declining car sales and position them well ahead of the EV revolution that seems to be just around the corner. Both companies moved sharply higher on the news on Friday and Volkswagen seems to be benefiting from upbeat sentiment on Monday as well.
DAX members at 10:03 am BST. Source: Bloomberg
Other company news
Carsten Spohr, CEO of the Deutsche Lufthansa (LHA.DE), made some harsh comments on the ongoing price war among the European carriers. Spohr said that tickets that cost less than €10 should not be offered as they are “economically, ecologically and politically irresponsible”. Although the name was not mentioned, the comments are a direct attack on Ryanair, the European low-cost carrier. Let us recall that Lufthansa decided to lower its profit forecasts last week on the back of growing competition in Europe.
BASF (BAS.DE), the German chemical company, has been put on the Moody’s watchlist. The agency upheld A1 rating for the company on Friday but changed the outlook from stable to negative. Such an action often precedes rating downgrade but investors does not seem to be concerned as BASF can be found among DAX top movers on Monday morning.
Volkswagen (VOW3.DE) share price was significantly boosted over the past month and moved over 10% higher in that period. The stock failed to break above the resistance zone ranging around €155 handle last week but well-received details of the alliance with Ford helped the price revisit the aforementioned zone. However, one should be aware that moving averages are close to painting a death cross scheme (orange circle). Source: xStation5
