Summary:
- Global warming may turn to be a drag for insurers and reinsurers
- DAX (DE30) seeks support at 33-period moving average
- Finnish company said to be interested in buying Thyssenkrupp’s (TKA.DE) elevator unit
European stock markets launched Thursday’s trading lower as the US decision to ban Huawei products added to trade war concerns. Bears dominate in the western part of the continent while stocks from the Eastern Europe, for example Polish and Russian, moved higher at the opening. Miners outperformed while banks lagged the most during the first minutes of the European session.
Enormous rise in the number of weather-related catastrophes in 2018. Source: Bloomberg, Munich Re
Spike in catastrophe losses caused by global warming?
The previous year was marked by an abnormal spike in the number of the European weather-related catastrophe. While weather changes are often said to be random climatologists say that it is likely that severe storms will occur more often in the future. Global warming is said to be the cause. Scientists say that the average temperature on the European land has risen nearly 1.5 degrees Celsius since the beginning of the previous century and that with higher temperatures probability of hailstorms occurring is rising. To make things worse they are also occurring more unexpectedly making them even more damaging. All of this is putting pressure on insurers. While new insurance policies are likely to include higher premiums to offset higher probability of negative weather impact, current policies are unlikely to be changed. Having said that, a mismatch between expected losses and actual ones may turn to be a drag on the net result of insurers and reinsurers, like for example Munich Re (MUV2.DE).
DAX (DE30) surged on the car tariff reports yesterday. After a small pullback over the night the index is trading in the vicinity of 33-period moving average (green line, H4 interval). The short-term support zone can be found in the very same area therefore we cannot rule out that buyers will try to resist downward pressure that is present in the Western Europe today. Source: xStation5
Company News
Thyssenkrupp (TKA.DE) is the best performing DAX member on Thursday morning. Let us recall that the company recently announced that it won’t chase JV with Tata Steel and instead may decided to sell the elevators unit. Reuters reported today that Kone (KNEBV.FI), the Finnish company, is interested in buying the elevator unit. However, no official confirmation from either company has been offered yet.
The German carmakers are trading lower at the beginning of today’s session what can be seen as a sort of corrective move following yesterday’s gains. Let us recall that reports surfaced yesterday saying that the US President Donald Trump is likely to postpone the decision on car tariffs for 6 months. The information sent BMW (BMW.DE), Daimler (DAI.DE) and Volkswagen (VOW.DE) significantly higher in the final hour of yesterday’s European session.
DAX members on Thursday morning (8:39 am BST). Source: Bloomberg
