Summary:
- Draghi strikes upbeat tone, remains confident on economy
- DAX (DE30 on xStation5) climbs back above the 11400 pts handle
- Bayer (BAYN.DE) received “orphan drug” status for its Hemophilia A drug from FDA
Stocks from the Old Continent launched Wednesday’s trading higher thanks to upbeat moods during yesterday's US session and today’s Asian one. UK equities benefited from the GBP weakening and were outperforming in the first minutes of trade. On the other hand, stocks in Spain, Sweden and Russia traded lower. Miners and carmakers led gains while real estate companies took the biggest step back.
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DE30 (DAX futures underlying) halted decline of the 50-session moving average and managed to bounce higher from there. The index trades back above the 11400 pts handle and may be set to grind even as the combination of 200-session moving average and the 11680 pts handle should serve as the nearest resistance level to watch. Source: xStation5
Taking a look at economic calendar one could spot that we are going to experience some kind of ECB speakers’ marathon today. The first speech is already behind us and it could have been the most important one as it was delivered by the ECB President, Mario Draghi. The European central banker to huge extent repeated the message market were offered during ECB meeting earlier this week. However, his remarks were a bit more upbeat this time. Draghi said that he still expects demand to recover in case main downside risks do not materialize. He also said that ECB has enough instruments in its toolkit to ensure it can deliver on its mandate and that inflation will eventually converge to the target. ECB President said that the Bank will aim to mitigate side effects of negative interest rates while trying to retain benefits. An approach of Bank of Japan or Swiss National Bank could be helpful. Those banks use a kind of tiering system that enables them to exclude reserves of commercial banks from negative impact of sub-zero rates. However, one of the ECB members said yesterday that the Bank will provide more details on new stimulus measures in June and it is likely that any details on plans announced by Draghi today will be presented at that time as well.
Major European stock market indices after the first hour of trade:
- DAX (DE30): -0.08%
- FTSE 100 (UK100): +0.11%
- CAC40 (FRA40): -0.20%
- IBEX (SPA35): -0.15%
- FTSE MIB (ITA40): +0.10%
DAX members after the first hour of trade. Source: Bloomberg
Company News
Daimler (DAI.DE) is one of the best performing DAX stocks after the first hour of trade. The Financial Times reported that the German carmaker discusses selling 50% stake in Smart division to Chinese Geely. According to the report, the deal should be concluded before Shanghai Auto Show scheduled for 16-25 April. Daimler declined to comment on or confirm the news.
Wirecard (WDI.DE) shares experienced an abnormal surge in the afternoon yesterday. The company announced that independent law firm that was investigating alleged illegal actions of the German fintech, found nothing to be concerned about. Indeed, some employees at Wirecard’s Singapore unit may face criminal liability but no fault on behalf of the whole company was evidenced. Following the announcement Wirecard shares traded even over 30% higher.
Bayer (BAYN.DE) received a lucrative designation from the US Food and Drug Administration for its Hemophilia A drug. The US agency granted an “orphan drug” status to the drug. Such status grants company 7-years of exclusivity to market the drug before any substitutes can be permitted for sale. Nevertheless, the company trades lower today hinting that market does not consider it a “big thing”.
EON (EOAN.DE) can be found among DAX biggest laggard today. The company received a downgrade at Oddo BHF. The financial services company lowered recommendation for the stock from “buy” to “neutral”. One-year price target was revised from €10 to €10.70.
Bayer (BAYN.DE) keeps being pressured by legal woes surrounding Roundup weedkiller. Share price dived over 20% since the beginning of March. No relief can be spotted in sight as the stock broke below its previous local low of €58.35. In turn, the company is trading at the lowest levels since July 2012. In case downward move is continued one cannot rule out a test of the €48 handle. Source: xStation5
