DE30 remains in recent short-term trading range

• European markets trade slightly lower

• DE30 fails to break above 15,310 pts once again

• Volkswagen to halt part of production in Mexico

Stock markets in Europe trade slightly lower on Tuesday. While the opening of the session for most European blue chips indices was either flat or slightly higher, indices started to move lower later on. Stocks in Austria underperform the most while Russian indices are among a few that trade higher today.

Source: xStation5

Situation on the DE30 market has been little changed as of late. German index continues to test the resistance zone at 15,310 pts, marked with the 50% retracement of a mid-April correction. Another attempt of breaking above was made today and it looks like it has failed as well. A pullback towards the lower limit of a recent short-term range at 15,250 pts may be now on the cards. Breaking below it could pave the way for a decline towards the 15,180 pts support. However, unless we see a break above 15,310 pts or break below 15,250 pts, a narrow 50-points trading range may be maintained. Fed will announce monetary policy decision tomorrow in the evening and it could serve as a trigger for a breakout.

Company News

Mexican unit of Volkswagen (VOW1.DE) will adjust production rates of Jetta and Tiguan models amid shortage of semiconductors. Jetta production will be halted from May 3 to May 19 while Tiguan production will be halted from May 6 to May 16. Decision comes in spite of Volkswagen efforts to minimize the negative impact of chip shortages.

Continental (CON.DE) reached an agreement with employee representatives over phasing out the tire production plant in the western part of Germany. Continental agreed to phase out production at the plant by the end of 2022, rather than by the end of 2021. Company said that 1,200 out of 1,800 jobs at the factory will be maintained through 2022 and that only 500 jobs will remain at the site in 2023 and beyond. However, those 500 jobs will also be laid off eventually.

Analysts' actions

• Hannover Re (HNR1.DE) upgraded to "neutral" at Exane. Price target set at €150

Continental (CON.DE) is trading lower today. Stock made a failed attempt of breaking above the €120 resistance zone yesterday. Should the ongoing pullback deepen, bears may target recent lows in the €110.50 area. Note that the upward trendline can be found in the same area. Source: xStation5