DE30: Lufthansa slumps on oil surge and poor industry outlook

• Indices trade under pressure as tensions in the Middle East rise

• DE30 halts decline and bounces off the zone at 13150 pts

• Lufthansa (LHA.DE) sinks on oil price surge and poor outlook signalled by industry association

Moods on the European stock exchanges are sour as tensions in the Middle East rise. The German DAX is one of the worst performing indices in the region, thanks to significant decline in Lufthansa share price. Russian indices stand out among the rest as they manage to show significant gains.

German inflation data due today!

While markets are focused on the Middle East tensions, one should not forget about flash CPI readings for December. German reading will be published at 1:00 pm GMT and is expected to show an acceleration from 1.1% to 1.4% YoY. There is a high chance that the reading will match or even exceed those expectations based on partial state data. Below we provide you with a summary of the already released data:

• Saxony: 1.4% vs previous 1.1% YoY

• Hesse: 1.5% vs previous 0.9% YoY

• Bavaria: 1.3% vs previous 0.9% YoY

• North Rhine Westphalia: 1.7% vs previous 1.2% YoY

Source: xStation5

Equities started 2020 on a strong note but upbeat moods did not last long. DE30 reach 3-week high yesterday but slumped in response to killing of the Iranian general. The German index plunged back into the range of the downward channel and tested the support at 13150 pts later on. The zone managed to fend off the bears for now but one should keep in mind that any retaliation from Iran could exert additional pressure on indices. In case of a break below the zone, traders should focus on 13100 pts handle - the lower limit of the channel and previous local low.

DAX members at 9:40 am GMT. Source: Bloomberg

Lufthansa (LHA.DE) is the worst performing stock in the DAX index today. One of the reasons the carrier is underperforming is surge in the oil price. The other reason is FAZ report. FAZ newspaper said that number of passengers at German airports is expected to fall by 0.7% this year, citing data obtained from industry association ADV. Number of takeoffs and landings is forecasted to fall by 2.9% due to higher fuel costs, insolvencies and events like grounding of Boeing 737 MAX. 

Commerzbank (CBK.DE) acquired an equity stake in Comdirect from Petrus Advisers. The Bank now holds over 90% shares, a limit required to launch a targeted squeeze-out. Remaining Comdirect shareholders will receive cash compensation for their shares.

According to the Guardian, Volkswagen (VOW1.DE) is in talks with 400,000 thousands Germans that own vehicles affected by the “Dieselgate” scandal. The company seeks an out-of-court settlement. However, talks are said to be in the early stage and there is no certainty that any agreement will be reached.

Analyst actions

• K+S (SDF.DE) was raised from "neutral" to “buy” at Citi

Lufthansa (LHA.DE) has been trading near the 200-session moving average for the past two months. However, surge in oil prices caused the stock to slump today. A trendline is being tested at press time and break below could pave the way towards the zone at €14.70. Source: xStation5