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European stocks struggle for direction
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DE30 holds above 12,000 pts
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Commerzbank (CBK.DE) plans deeper cost-cutting measures
Stocks in Europe recovered from overnight decline but struggled for direction during European cash session. DAX trades slightly above Friday's close but other major indices from the region trade lower. Overally, the scale of moves is minor and subdued trading may continue until the US open.
Accounting scandal at Wirecard echoes throughout Germany. German government said that it will terminate the country's contract with the Financial Reporting Enforcement Panel, private sector accounting watchdog. Its duties will be passed to BaFin and authorities plan to expand its power to also allow for launching investigation into company's reports.
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Source: xStation5
DE30 recovered from overnight decline and a brief drop below 12,000 pts. The German index halted today's bounce at a 50-hour moving average (green line). Nevertheless, bears do not seem to be too convinced and it looks likely that we will see some sideways trading until US traders step in. Daily close above the zone at 12,200 pts would be an encouraging sign for bulls. A lot will depend on how the pandemic situation continues to develop as further rise in cases in the United States could prompt more restrictions. In such a situation markets could see a strong negative reaction to diminishing hopes for strong economic recovery. Pulling back below 61.8% retracement, or June 15 low, would be a strong selling signal.
Wirecard (WDI.DE) shares surge as investors try to speculate on the fallen company. However, stock is still down 97% month-to-date. Source: Bloomberg
According to a Bloomberg report, executives at Commerzbank (CBK.DE) are planning to boost cost-cutting measures after being criticized by top private shareholders. The Bank may decide to slash over 7,000 jobs and close around 400 branches. However, some executives are sceptical and the matter is likely to be discussed during an upcoming supervisory board meeting on Wednesday.
RWE (RWE.DE) wants to engage in talks with Amundi, one of its investors, after it has criticized the company for the pace of coal exit. Amundi is concerned that RWE plans to keep some coal plants operating until 2038, which would be at odds with Paris Climate Targets. RWE plans to achieve carbon-neutrality by 2040 with heavy focus on renewables in the year to come.
Guillaume Faury, CEO of Airbus (AIR.DE), said in an interview with Spiegel that the company will announce the size of jobs cuts at the end of July. Executive said that cuts will be based on an assumption that revenue drops 40%.
Commerzbank (CBK.DE) attempts to bounce off the support at 23.6% retracement of February-March sell-off today. However, one should keep in mind that the stock has painted a sequence of lower highs recently and unless we see a strong break above the €4.75 area, bears seem to be in the market's favour. Source: xStation5
