DE30: Stocks try to recover after gloomy PMIs

• European markets pulled back after big drop in PMIs

• DE30 made failed attempt of breaking above 10,500 pts in the morning

• Vonovia (VNA.DE) considers launching bid for Deutsche Wohnen (DWNI.DE)

European stock markets plunged along US futures following release of French and German PMI data. However, an attempt of recovery can be spotted with DAX trading 0.5% off the session lows. EU leaders will hold a video conference later in the day.

Merkel says stimulus should be part of EU budget

German Chancellor, Angela Merkel, called for a Europe-wide stimulus scheme that will be financed from the European Union's budget. In a speech to the lower house of the German parliament Merkel said that European growth program could support recovery over the next two years and that is the goal. Note that leaders of the European Union member countries will hold a video conference today where they will discuss next steps. German Chancellor also urged German lawmakers to accelerate works on the €500 billion stimulus package in order to make funds available from June 1.

Source: xStation5

DE30 continued to climb and made a test of the resistance zone at 10,500 pts ahead of today's European cash session open. The index failed to break above and disastrous PMI readings from France and Germany pushed it significantly lower. Note that 200-hour moving average (purple line) has been acting as a resistance for some time and given that it now coincides with the aforementioned zone at 10,500 pts, it is likely to remain a significant hurdle for the bulls. Note that there are two major releases left in the calendar today - US jobless claims (1:30 pm BST) and US PMIs (2:45 pm BST). Both events are likely to trigger additional volatility and both are expected to be troublesome from the economic point of view. Having said that, bears may prevail in the later part of the day and in such a case the 10,200-10,250 pts area could serve as the first support. 

DAX members at 9:58 am BST. Source: Bloomberg

Wirecard (WDI.DE) is the top moving DAX member today. The German payments firm said that the audit found no questionable accounting practices so far. However, the company said it is not ready yet to release a full audit report. Let us recall that questions of Wirecard's accounting practices arose after Financial Times revealed the company may have inflated sales at its Asia unit.

Daimler (DAI.DE) released preliminary results for the first quarter of 2020. The German carmaker said that EBIT plunged 78% YoY, to €617 millon. Company said it had a negative free cash flow in the first quarter of 2020 and that it plans to cut 10,000 jobs worldwide for annual cost savings of €1.4 billion this year. The German carmaker abandoned its profit outlook issued two months ago and no longer expects this year's profit to be significantly above 2019 result.

According to a Bloomberg report, Vonovia (VNA.DE) is considering launching a bid for rival Deutsche Wohnen (DWNI.DE). Tie-up would create a €40 billion real estate giant. Vonovia is currently exploring options for the acquisition. However, as the deal would involve two of the biggest German residential landlords it would likely face significant regulatory scrutiny.

Wirecard (WDI.DE) gains on the news that the audit found no questionable practices. Stock is making a jump above the 200-session moving average (purple line) and 78.6% retracement of February-March drop. Price is closing in on a major resistance zone ranging above the €140 handle. Source: xStation5