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European stocks recover from morning drop
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DE30 breaks above 200-hour moving average
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Wirecard (WDI.DE) says missing €1.9 billion may not exist
European stocks launched the week lower but have managed to recover from declines. However, the scale of advance is minor. There are not any major data releases scheduled for today so trading is likely to remain headline driven.
Top officials from the European Union and China are expected to hold a video call today. Ursula von der Leyen, President of the European Commission, and Charles Michel, President of the European Council, will hold discussions with Premier Li Keqiang and President Xi Jinping. Video meeting is viewed as a chance to ease tensions between EU and China after the former expressed its dissatisfaction over how China informed the rest of the world about Covid-19 pandemic.
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Source: xStation5
DE30 started the week lower, just like US futures, but enjoyed a strong upward move after the launch of the European cash session. The index broke above the 200-hour moving average (purple line) - a hurdle that has limited upside recently (orange circles). Note that index made some false breaks above this average this month therefore investors should not take current break for granted. Daily close above 12,400 pts would confirm a break and could encourage buyers to take more action. In such a scenario, 78.6% retracement at 12,550 pts should be seen as the first resistance to watch.
Daimler (DAI.DE) dipped at the start of today's session but began to recover after a test of the 200-session moving average. The stock is now facing a lower limit of recent short-term trading range (€36.50-37.50). Breaking above €36.50 would pave the way for an attack on €37.50 resistance. Source: xStation5
Wirecard (WDI.DE) started a new week under significant pressure as the stock drops over 30% today! German payments company said that €1.9 billion that were allegedly missing may have never existed. Wirecard decided to withdraw full-2019 and Q1 2020 financial results saying they are not correct. Company tries to persuade lenders to extend its credit lines as failure to do so could threaten the survival of Wirecard. Share price lost over 80% in value over the course of past 3 sessions.
State-aid deal Lufthansa (LHA.DE) has struck with the German government has been put under question as the company's largest shareholder threatened to vote against bail out. Heinz Hermann Thiele, German billionaire who holds 15.5% stake in Lufthansa, said that equity investors should be offered more favourable terms given that the 20% stake the German government will take in the company will significantly dilute their ownership. According to recent media reports, Thiele will hold talks with Lufthansa CEO Spohr and two German ministers today.
BMW (BMW.DE) and Mercedes-Benz, subsidiary of Daimler (DAI.DE) announced a decision to cancel autonomous driving partnership. Two companies were jointly developing next-generation autonomous vehicles with plans to market them in 2024. However, unfavourable economic conditions caused by Covid-19 pandemic as well as higher-than-expected cost made carmakers abandon the project.
