DE30 swings around 11,000 pts mark

• Stocks in Europe struggle for direction

• DE30 trades in narrow range near 11,000 pts handle

• Hundreds of Lufthansa (LHA.DE) planes to remain ground in 2021 and 2022

Optimism on the stock markets has faded and we can observe European indices trading mixed today. DAX trades flat, Dutch AEX gains and French CAC40 drops. FOMC minutes will be released today in the afternoon but a new EU recovery fund proposal is likely to have more impact on European assets.

New EU recovery fund proposal?

Earlier in the week France and Germany had agreed on the idea of European recovery fund. The fund worth €500 billion would be aimed at reviving growth in the post-pandemic European Union and distributed among the worst hit countries. However, a group of EU countries opposes the idea of providing funds as grants, not loans. Austria, Netherlands, Denmark and Sweden are preparing their own proposal and Bloomberg reports that it could be revealed later today, probably around 2:00 pm BST. Traders should keep this in mind while trading European assets today as it could be a potential market mover.

Source: xStation5

Following a break above 11,000 pts, rally on DE30 eased. The index started to trade within a narrow 10,970-11,100 pts range. Investors are in wait-and-see mode as some concerns surfaced over results of Moderna's vaccine. What's probably more important for European markets is new EU recovery fund proposal (see paragraph above) so keep in mind that volatility may increase in the early afternoon. In case a break below the lower limit of the range occurs, the first short-term support can be found at 10,875 pts swing level. The more important one is the zone around 10,750 pts handle. Recent peaks (10,200 and 10,300 pts) are near-term resistance levels but their significance may not be too big.

Fresenius Medical Care (FME.DE) breaks above 50% retracement of sell-off started in October 2018. Being fuelled by an upgrade at Morgan Stanley, share price rises around 3% today. Note that the stock has fully recovered from the coronavirus sell-off already and trades at mid-February levels. The closest major resistance zone can be found at €80 so the stock may add another 6.5% before encountering issues. Source: xStation5

TCI Fund Management, a UK-based asset manager, filed a criminal complaint against executives of Wirecard (WDI.DE) with the prosecutor's office in Mnuchin, Germany. TCI said that the basis for the complaint was KPMG audit and recent media reports, including reports from Financial Times.

Reuters managed to get a look at an internal letter sent to staff of Lufthansa (LHA.DE). News agency reports that the German carrier expects 300 of its planes to remain grounded in 2021 and 200 to remain grounded in 2022 as well due to the aftermath of the coronavirus pandemic. Moreover, Lufthansa also expects more jobs cuts at maintenance and catering units to be inevitable sooner or later.

Fresenius SE (FRE.DE) and Fresenius Medical Care (FRM.DE) can be found among leaders today. Both stocks received an upgrade at Morgan Stanley. Fresenius SE was raised to "buy: (price target €51) while its subsidiary was upgraded to "neutral" (price target €70).

Theodor Weimer, CEO of Deutsche Boerse (DB1.DE), said that he plans to stay in the post until the end of his term (end-2024). Statement came amid speculation that he may leave for the Deutsche Bank's Chairman post when Paul Achleitner retires in 2022.

The Board of Covestro (1COV.DE) proposed a dividend of €1.20 for fiscal-2019. Proposal will be reviewed at the Annual General Meeting scheduled for July 30. Proposed amount equals a dividend yield of around 3.9%.

Covestro (1COV.DE) is once again trading near an important short-term resistance zone. The zone ranging below €31 handle has been limiting upside during the recovery rally. The fact that a company is able to payout dividends should attract some demand but as one can see, no big rally is taking place. Source: xStation5