DE30 upholds tight trading range

• European indices slide at the beginning of Tuesday’s session

• DE30 upholds tight trading range

• Volkswagen (VOW3.DE) and Porsche (PAH3.DE) with upgrades at Goldman Sachs

Major European stock market indices are underperforming at the beginning of Tuesday’s session. Dutch equities tank the most while shares from Portugal post a small gain. Investors should expect today’s trading to be headline-driven as markets are focused on trade talks scheduled to begin later today.

Source: xStation5

DE30 failed to break above the resistance zone ranging around the 12115 pts handle yesterday and is eyeing a test of the 12000 pts handle. One should keep in mind that the German index is likely to experience elevated volatility today due to ECB minutes release and launch of Sino-US trade talks. Having said that, we cannot rule out a break out of recent tight trading range (11950-12150 pts). In such a scenario the closest support levels to watch are 11875 pts and 11800 pts. On the other hand, breaking a topside resistance could pave the way towards the 12210 and 12305 handles. 

DAX members at 08:45 am BST. Source: Bloomberg

Volkswagen (VOW3.DE) is trading higher after receiving a recommendation at Goldman Sachs. The bank reinstated coverage of Volkswagen’s shares with “buy” rating. Price target was set at €193, implying a 28% increase against yesterday’s closing price. Goldman Sachs also issued a “buy” recommendation for one of Volkswagen’s subsidiaries, Porsche Automobil Holding (PAH3.DE). Porsche received a price target of €77, around 31% above yesterday’s close.

Schaeffler (SHA.DE), the German manufacturer of elements used in automotive, aerospace and industrial sectors, is looking to reduce workforce. The company plans to slash 1300 jobs through voluntarily exits. Schaeffler will offer employees severance pay, early retirement or partial retirement. Exits will start from November.

Deutsche Lufthansa (LHA.DE) is said to be considering taking part in Alitalia rescue. The German carrier could replace Delta Air Lines in a consortium that plans to save troubled Italian carrier. Deadline for submitting binding offers for Alitalia ends on 15 October.

Bayer (BAYN.DE) expanded partnership with the UK healthcare software firm, Sensyne Health. The collaboration was expanded to include cardiovascular diseases. The German company is trading higher on the news.

Volkswagen (VOW3.DE) continues to trade within a wide trading range. The stock made a break above the resistance zone ranging around €155 handle. However, the share price once again failed to smash through the €160 barrier. Following a pullback the stock managed to bounce off the 200-session moving average near the midpoint of the range. In case an upward momentum is sustained, a retest of the aforementioned resistance zone could be looming. Source: xStation5