DE30: German GDP growth slumps to 6-year low

• German Federal Statistical Office released first estimate of 2019 GDP growth

• DE30 continues to trade below trendline

• Carmakers and tech stocks decline as US rules out further tariffs cuts

Moods on the European stock exchanges are mixed in the first half of Wednesday’s session. Majority of blue-chip indices decline but gains can be spotted in Russia, Portugal and the Netherlands. German equities were unimpressed by GDP release that showed growth slowing to a 6-year low.

German GDP growth at 6-year low in 2019! 

The German Federal Statistical Office released an early estimate of the German GDP growth in 2019. The release came in-line with market estimates and showed German economic output rising 0.6% last year. This marks a significant slowdown from 1.5% recorded in 2018. In fact, 0.6% is the weakest pace of GDP growth since 2013, when GDP grew 0.4%. The reading shows a toll the manufacturing slump has taken on the economy. 2020 is expected to be challenging as well but some green shots could have been spotted in recent releases from the manufacturing sector. 

Source: xStation5

DE30 continues to be guided by a short-term downward trendline. The German index made another attempt of breaking above the trendline today but has failed once again. The trendline can be found at 13450 pts currently and is additionally strengthened by 50- and 100-hour moving averages (green and red line respectively). The index continues to trade within an Overbalance structure and the lower limit of the structure (12860 pts) remains the final support. The index may get more volatile in the afternoon when ‘Phase One’ trade deal documents are released.

DAX members at 10:02 am GMT. Source: Bloomberg

DAX declines today but member stocks trade mixed. Declines dominate among trade-sensitive stocks like carmakers or tech stocks as US pledge not to reduce more tariffs ahead of presidential elections cast some doubt on future Sino-US relations.

According to the Handelsblatt report, Wirecard (WDI.DE) is set to impose a 10k EUR balance limit on banking-app accounts with 0.75% interest rate. The upper limit was introduced as the company started to receive big balance inflows since the announcement of the 0.75% rate.

Polish consumer protection office, UOKiK, imposed a 120.6 million PLN (around €28.5 million) fine on Volkswagen (VOW1.DE) for misleading clients about CO2 emissions. 

Analyst actions

• Fraport (FRA.DE) was cut from “buy” to “sell” at Bankhaus Metzler. Price target was set €65

• Aareal Bank (ARL.DE) was cut from “buy” to “hold” at Pareto Securities. Price target was set at €31

Fraport (FRA.DE) is taking a dive today following a double-downgrade at Bankhaus Metzler. The stock pulls back after a failed attempt of breaking back above the resistance zone ranging above 38.2% Fibo level of the upward move started in December 2018. The attention now shifts to the support zone at 50% Fibo level (€70 area). Source: xStation5