- European indices trade lower
- DE40 pulls back to 17,100 pts area
- Rheinmetall gains on joint venture with Ukraine
European stock market indices trade lower at the beginning of a new week. German DAX and French CAC40 trade 0.3% lower, Dutch AEX drops 0.2%, FTSE MIB declines 0.3%. UK FTSE 100 gains 0.2% while Spanish IBEX adds 0.2%. Economic calendar for today is light and liquidity conditions on the markets are expected to be thinner due to US and Canada holidays.
Bundesbank said today that Germany is likely in recession now due to weak external demand, weak consumption and cautious investments. German central bank still sees no recovery in the economy and expects weak phase to continue. Flash German PMIs for February will be released on Thursday at 8:30 am GMT and will show an up-to-date insight into moods within the Europe's largest economy.
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Source: xStation5
DAX futures (DE40) broke above the upper limit of the 16,950-17,100 pts range and, unlike in the case of previous false breakouts (orange circles), managed to reach the textbook range of the breakout at 17,250 pts. However, bullish momentum faded after reach this level and the index pulled back to the upper limit of the previously broken trading range. A break back below it would suggest that an almost month-long sideways move is still in play and that the lower limit of the range in the 16,950 pts area may be the next target of the sellers.
Company News
Rheinmetall (RHM.DE) is trading at new record highs and above €400 mark for the first time in history. Stock gains 3% on news that the company signed a memorandum of understanding with Ukraine to set up a joint venture to produce 155 millimeter artillery shells directly in Ukraine.
Volkswagen (VOW1.DE) announced that it will invest around $1 billion in boosting EV business at its Mexico unit. This follows an investment of over $750 million in the country announced in late-2022.
Analysts' actions
- Bechtle (BC8.DE) downgraded to 'sell' at Barclays. Price target set at €40.00
Volkswagen (VOW1.DE) is making another attempt at breaking above the $136.50 swing area. A break above would push the price to a level not seen since the first half of August 2023. Stock broke above the 200-session moving average (purple line) earlier this month, which acted as a trendline since end-202, and is now trading almost 30% above late-November low. Source: xStation5
