Summary:
- Lufthansa (LHA.DE) faces potential employee strike
- DAX (DE30) surges fuelled by upbeat PMIs
- Deutsche Bank (DBK.DE) dips pressured by news reports
European shares are trading higher after the first hour and a half of trade. The biggest gains can be spotted on the Austrian, Spanish and Polish bourses while indices from Russia and Switzerland are the only ones to trade below yesterday’s close. Oil & gas companies lead gains while healthcare stocks lag the most.
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DE30 managed to halt yesterday’s decline at the 12280 pts handle. The German index is trading higher today fuelled by better-than-expected PMI readings. There are 2 levels to watch in case the upbeat sentiment prevails - 12420 pts and 12460 pts. The first one marks this week’s high while the second YTD highs. The aforementioned 12280 pts handle should the first short-term support to watch. Source: xStation5
Lufthansa’s woes continue with employees considering a strike
The current week is the week that Lufthansa shareholders would like to forget as quickly as possible. A profit warning and a few analysts’ downgrades create an immense downward pressure on the stock price and the latest piece of news suggests that the German carrier may continue to be pressured on the final trading day of the week too. Namely, cabin crew union at Lufthansa will hold ballots on whether to launch a strike amid failed pay rise talks or not. According to union representatives, strikes could start as soon as July in case union members back the motion. Note that the summer period is usually the busiest and the most profitable for carriers therefore a strike now may be especially harmful for Lufthansa’s full-year bottom line. The stock is trading 15% lower against last week’s close.
DAX members at 9:50 am BST. Source: Bloomberg
Other company news
Deutsche Bank (DBK.DE) can be found among the best performing DAX stocks on the final session of the week. It is quite strange given that the latest reports concerning the company are not too positive. Reuters says that the Bank’s executives expect tougher regulatory action in the US over stress tests. Results of the stress tests are not known but it is rumoured that the Deutsche Bank may fail them. Additionally, the Bank is being pressured by the New York Times report. NYT claims that the Bank is facing a US probe over the money laundering activities.
Deurr (DUE.DE), the German company that supplies various auto manufacturers, is the best performing MDAX member on Friday morning. The company announced that it will place €200 million of bonds. A point to note is that the coupon rate on the bonds is floating and tied to the company’s sustainability rating. The average coupon of the bonds is 0.84% allowing the company to finance its operations cheaper than before.
Rheinmetall (RHM.DE) shares are likely to be more active today following reports from Boersen-Zeitung. The German newspaper claims that leaders of the CDU-SPD coalition are advocates of the Rheinmetall tie-up with Krauss-Maffei Wegmann. The combined company could be a major provider of defense equipment for the German government, including tanks.
Lufthansa (LHA.DE) moves lower and lower as investors are served more downbeat news concerning the company each day. The company dropped over 15% this week alone and has found itself at the price zone that was not in play since early-2017. The company’s value more than halved since reaching ATH at the turn of 2017 and 2018. Source: xStation5
