Summary:
- German business lobby says delaying Brexit only cause uncertainty to increase
- DAX (DE30 on xStation5) lacks direction
- Volkswagen’s (VOW.DE) corporate bond emissions during 2010-2015 period targeted by SEC
Following gains achieved on the major Asian stock exchanges (spare for Australia) equities from the Old Continent launched Friday’s trading higher. Minor gains could be spotted all across Europe in the first minutes of trade with UK and Russian stocks being among outperformers. Chemical stocks led advance while travel and real estate companies lagged the most.
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DE30 price action still seems to be locked in between the resistance level at 11680 pts handle and the upward sloping trendline. Narrowing trading ranging hints at looming break out of this triangle pattern. Bulls seems to be losing steam as shown by yesterday’s spinning top candlestick pattern. Source: xStation5
Outcome of yesterday’s vote in the UK parliament can be seen as some kind of relief as it provides scope for preventing leaving the EU without a deal in place. However, not everyone seems to be happy with it. Martin Wansleben, chief of the DIHK Chambers of Industry and Commerce said that decision to delay Brexit harms German business. He reasoned his stance by saying that earlier German firms were uncertain over the outcome of the Brexit talks and voting while now they are not only uncertain over the outcome but also over the timing. Wansleben added that now around 70% of the German companies that also operate in the UK expect conditions there to deteriorate throughout 2019. Until yesterday the Brexit date of 29 March was one of only few things that business could take for certain and base their forecasts on it. Having said that, we may see some pressures on EU and UK to make the negotiation process more transparent as it could help mitigate potential damage to enterprises significantly.
Major European stock market indices after the first hour of trade:
- DAX (DE30): +0.15
- FTSE 100 (UK100): +42%
- CAC40 (FRA40): +0.36%
- IBEX (SPA35): +0.35%
- FTSE MIB (ITA40): +0.19%
Wirecard (WDI.DE) sinks on the back of another downbeat report concerning its operations in Asia. Source: Bloomberg
Company News
The US Securities and Exchange Commission decided to sue Volkswagen (VOW.DE) over misleading investors. The US watchdog claims that Volkswagen deceived investors when selling corporate bonds in 2010-2015 period by not disclosing the fact that its cars do not meet emission standards. While SEC was investigating Volkswagen since 2017, the latest announcement hints that enforcement action may take place.
Wirecard (WDI.DE) found itself under pressure once again. The rebound was halted by another downbeat report on company’s operations in Asia. Handelsblatt reported that apart from Wirecard’s operations in Singapore, Indian branch was also being investigated by regulators. Moreover, Citi issued “sell” recommendation on the stock encouraging bears to become even more active. The company is the worst performing DAX member today.
BASF (BAS.DE) can be found among DAX leaders today. Chairman of the Chinese branch said that company will seek to boost investment in the world’s second biggest economy despite current challenges to the global economy. Asia Pacific region accounted for over 23% of BASF’s revenue in 2018.
