DE30 faces strong resistance at 13150 pts

• European indices decline as markets are scared of possible Middle East war

• DAX fails to break back above the resistance zone at 13150 pts

• Lufthansa (LHA.DE) suspends flights over Iran and Iraq

Stocks in Europe echoed lacklustre performance of the Asian equities and turned lower on Wednesday. Risk aversion is an aftermath of the Iranian missile attack on US targets in Iraq that happened over the night. Investors await statement from Donald Trump that is expected in the US morning hours.

Hard data from Germany continues to disappoint

German factory orders data for November was released today at 7:00 am GMT. Market expected a decline of 4.7% YoY what would mark an improvement against 5.6% decline reported in October. However, Germany manufacturing sector disappointed investors once again as orders declined 6.5% YoY. The decline was once again led by a plunge in domestic orders with domestic capital goods orders sinking the most (-10.7% YoY). Lacklustre reading exerting additional pressure on DAX index causing it to be one of the weakest in Europe today.

Source: xStation5

DE30 opened with a huge 1.6% downward price gap today as investors got spooked by Iranian attack on US forces in Iraq. However, the index has rallied around 150 pts since then and trades 0.45% lower against yesterday’s close. Price action in the morning shows that key upside hurdle to watch today will be resistance zone ranging around the 13150 pts. Long, upper wicks of the previous hourly candlesticks suggest that bears are looming in the vicinity of the zone. The nearest support to watch is the lower limit of the downward channel (currently at 13085 pts). 

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

Wirecard (WDI.DE) announced that it has partnered with Sprint Corporation, the US telecommunications company. The two companies will work together in areas related to Internet of Things as well as payments. The partnership focuses on retail business.

Lufthansa (LHA.DE) suspended flights over Iraq and Iran. The decision comes amid Boeing jet crash in Iran that killed around 180 people. Airlines from other developed countries made similar decisions.

Analyst actions

• Commerzbank (CBK.DE) was cut to “hold” from “buy” at Pareto Securities. Price target was set at €6

• Henkel (HEN3.DE) was cut to “hold” from “buy” at HSBC. Price target was set at €101

• BASF (BAS.DE) was cut to “neutral” from “outperform” at Credit Suisse. Price target was set at €66.50

• Covestro (1COV.DE) was raised to “outperform” from “neutral”. Price target was set at €45