DE30: European stocks start week under pressure

• South Korea loses top innovator spot to Germany in Bloomberg ranking

• DE30 pulls back from the 13540 pts handle

• Deutsche Bank (DBK.DE) to cut variable pay at investment bank by around 20%

European investors launched Monday’s session in mixed moods. Bears dominated in the western part of the Old Continent while the majority of equity indices from the eastern part opened higher. Insurers are the best performing sector group in the Euro Stoxx 600 index while retailers and media companies underperform the most.

Germany overthrew South Korea as world’s top innovator

Bloomberg released the 2020 edition of its Bloomberg Innovation Index. A shift has occurred at the top position of the ranking as South Korea failed to hold top position for the seventh year in a row as productivity slumped. Germany climbed to the top of the list thanks to solid patent activity, significant high-tech density and manufacturing value-added. Out of seven fields analyzed, tertiary education efficiency seems to be Germany’s weak spot as the country scored 26th in the category. However, authors of the index noted that R&D spending in Germany is highly concentrated as about a third of all funds go to the car sector and that it poses a major threat to the country’s innovativity should the sector start to struggle over a longer period of time.

Source: xStation5

DE30 failed to break above the 13540 pts handle at the end of the previous week. This was another failed attempt of surpassing this resistance. A point to note is that the German index is behaviour is similar to the one that succeeded the first failed attempt. Having said that, the index may be set to launch a downward move towards the first major support - zone at 13375 pts. The 13477 pts handle could facilitate a near-term support as it is marked with the 50-hour moving average (green line) and intraday high from January 16. The aforementioned 13540 pts handle continues to serve as a topside resistance of the trading range and a break above it would push DE30 towards records.

DAX members at 9:36 am GMT. Source: Bloomberg

According to the Bloomberg report, Deutsche Bank (DBK.DE) is set to slash bonuses at the investment banking unit by around 30%. Total variable pay will decline by around 20%. The Bank plans to increase the difference in bonuses received by top and worse performing employees. The move is part of a restructuring process started by CEO Sewing and would allow the Bank to save around €400 million.

Wirecard (WDI.DE) can be found among DAX leaders today. The German payments company announced it has launched a partnership with EasyTransfer, the Chinese online financial services platform. Under the partnership, the two companies will provide payments services to Chinese students overseas.

According to the Reuters report, the UFO cabin crew union plans further strikes at Lufthansa (LHA.DE) in order to increase pressure on management. Previous talks with the German carrier failed to bear fruit.

Analyst actions

• ProSieben (PSM.DE) was raised to “buy” at Citi. Price target was set at €15.50

• GEA Group (G1A.DE) was cut to “sell” at Deutsche Bank. Price target was set at €24

Deutsche Bank (DBK.DE) managed to jump around 25% between December 4 and January 9. However, the upward move was stopped by resistance zone at €7.50. This was the third attempt of breaking above this hurdle during the past 9 months and the third attempt that failed. The first potential support, in case the ongoing pullback deepens, can be found at €7.20. Source: xStation5