DE30 eyes retest of important support zone as bulls surrender

• Equities from Western Europe underperform on Tuesday

• DE30 looks to retest the resistance zone ranging below the 13300 pts handle

• Ceconomy (CEC.DE) suspends dividend payout for the second year in a row

European investors seem to ignore upbeat Bloomberg report on trade as major stock market indices from the Old Continent trade lower today. However, there are some exceptions as Italian, Polish and Austrian equities gain. 

Markets look past upbeat Bloomberg report on purchases of US farm goods

Bloomberg reports that Chinese authorities will grant more tariff waivers for the buyers of US agricultural products. While China seems reluctant to commit to purchase a specific amount of US farm products, the move hints that the Asian nations is in fact willing to buy more. Nevertheless, these news failed to lift moods at the start of the European trading session as main stock market indices from the Old Continent trade lower today.

Source: xStation5

Yesterday’s recovery on the DE30 market was put to a halt in the 13400 pts area. The index is experiencing a significant selling pressure at the beginning of the Tuesday’s session and may be set to retest the upper limit of the recently-broken consolidation range in the later part of today’s session. A bullish candlestick pattern painted in the 13320-13330 pts area could encourage buyers to take action and deliver another bounce higher. In such a scenario, traders should focus on yesterday’s swing level of 13400 pts as the first target.  

DAX members at 9:41 am GMT. Source: Bloomberg

Company News

Ceconomy (CEC.DE), the German electronics retailer, announced that adjusted earnings for the 12-month period ended in September stagnated at previous year’s level. However, the company forecasts higher profit and a minor increase in sales for the following fiscal year. As the company continues its revamp strategy, the dividend payout will be suspended for the second year.

NuCom, e-commerce unit of ProSiebenSat.1 (PSM.DE), is said to be considering purchase of Meet Group (MEET.US). According to Reuters report, NuCom has made preliminary expression of interest to purchase Meet but it is unsure whether M&A talks will follow.

DHL, a subsidiary of Deutsche Post (DPW.DE), announced that it will raise private parcel rates by an average of 3% starting January 1. The company cites increasing personnel and transportation costs as a reasons behind rate hike.

Analyst actions

• Bayer (BAYN.DE) was raised to “buy” from “hold” at Berenberg. Price target was set at €86

• SAP (SAP.DE) was cut to “underperform” from “neutral” at Bank of America Merrill Lynch. Price target was set at €118

• Aurubis (NDA.DE) was cut to “hold” from “buy” at DZ Bank. Price target was set at €55

Ceconomy (CEC.DE) is pulling back today as investors are disappointed with another suspension of dividend payout. The stock attempts to break back below the support zone ranging around €4.70 today but has not managed to do so yet. A break below the aforementioned support could put an end to the ongoing recovery and could hint at deeper downward move being on the cards. Source: xStation5