DE30: Spanish snap elections called for 28 April

Summary:

• Prime Minister Sanchez calls for snap elections

• DAX (DE30 on xStation5) bounces higher after dropping to 11000 pts handle

• Allianz’s (ALV.DE) higher dividend promise wins shareholders’ appeal

Stocks in Europe are recovering from yesterday’s drop today. Gains can be seen all across the Old Continent with Austrian, Russia and French equities being the leaders. On the other hand, German DAX is trading flat as disappointing car sales data weighs down on the domestic automobile sector.

DE30 (DAX futures underlying) pulled back to the support zone ranging 11000-11050 pts yesterday. The benchmark is trading somewhat higher after recoup initial morning weakness. The 33-period moving average (green line on the chart above) can be named as the closest resistance. However, it should be noted that the price was not as responsive to this technical obstacle in February as it was in January. Source: xStation5

Brexit, struggles of the Italian economy, snap elections in Spain - all these events additionally undermine confidence of the European consumers at times when euro area economy is slowing down. The European Automobile Manufacturers Association release the latest European car sales figures today and they seem to confirm the trend. Namely, automobile sales in the EU and EU Free Trade Association declined 4.6% YoY in January, fifth consecutive month of declines. Sales dropped in all of the European major markets with the biggest declines being seen in Spain and Italy, 8% YoY and 7.5% YoY respectively. Production bottlenecks resulting from introducing new emission tests as well as impact of tariffs were named as main reasons. Apart from that, no-deal Brexit would have a significantly adverse impact on the automotive sector as it could disrupt a bundle of supply chains. Having said that, there is little scope for improvement on horizon and car sales may have already peaked or be close to a peak.

Major European stock market indices after the first hour of trade:

• DAX (DE30): 0.00%

• FTSE 100 (UK100): +0.22%

• CAC40 (FRA40): +0.72%

• IBEX (SPA35): +0.39%

• FTSE MIB (ITA40): +0.43%

German carmakers underperform on Friday as lacklustre European car sales data spoiled investors’ moods. Source: Bloomberg

Company News

Allianz (ALV.DE), the German insurer, reported earnings for the fourth quarter of 2018 today. The report is a bit disappointing on the face of it. Revenue reached €32.725 billion, 0.49% below median estimate, and EPS was at €3.93 against expected €4.18. The company faced outflows from its asset management business as investors were fend off by the volatility in the final months of the previous year. However, insurer’s shares are trading higher today as the company promised to return more cash to shareholders. Namely, Allianz raised its dividend payout to €9 per share while analysts forecasted a raise to €8.80. Moreover, the German company also pledged to spend as much as €1.5 billion on share buyback programmes.

Deutsche Bank (DBK.DE) can be found among DAX leaders today. The only more important news concerning the lender that has spurred recently was Spiegel report. The newspaper reported that the German BaFin is seeking to extend its mandate to be allowed to investigate Deutsche Bank transactions with Danske Bank. However, the Deutsche Bank welcomed the report saying that it has not found evidence of any misconduct so far and it is eager to help the financial watchdog resolve the issue.

Allianz (ALV.DE) had quite good start of the 2019. Stock price jumped almost 6% YTD. However, rally was put on hold recently as the price began to struggle in the vicinity of the downward sloping trendline. Stock may keep trading in between the aforementioned trendline and 200-session moving average (purple line on the chart above) for some time. Source: xStation5