Trade-sensitive stocks lead DAX advance

• European stocks benefit from improvement in trade moods

• DE30 attempts to cover weekend gap at the beginning of cash session

• Trade-sensitive stocks lead DAX advance

Gains can be spotted all across the Old Continent on Monday morning as investors hope for progress in Sino-US trade talks. Italian and Spanish equities lead advance while Russian stocks lag the most. Nevertheless, even there indices trade above Friday’s closing prices. The German IFO index for November released at 9:00 am GMT was the only noteworthy print from Europe scheduled for today. The headline index rose in-line with expectations to 95 pts. Current assessment subindex ticked higher to 97.9 pts from 97.8 pts in October while expectations gauge moved from 91.5 pts to 92.1 pts (expected 92.5 pts).

Source: xStation5

DE30 opened higher today and stormed the near-term resistance at 13265 pts shortly after the opening of the cash session. However, the German index failed to break higher and a pullback took place. One can see that initial downward move was halted by the midpoint of the range - 13220 pts swing level. Nevertheless, the index still attempts to break lower. Should it manage to do so, the 13185 pts handle could be the next level to watch. This level saw a few price reactions during the ongoing sideways move and also marks the lower limit of the weekend upward gap.

DAX members after the first hour of trade. Source: Bloomberg

Trade-sensitive stocks can be found among DAX top movers on Monday morning. This a response to China agreeing to increase penalties on Intellectual Property theft. Carmakers, car parts manufacturers and tech stocks benefit the most.

Oliver Blume, production chief at Volkswagen (VOW1.DE), said that the German carmaker aims to increase productivity by 30% by 2025, compared to 2018 levels. Blue also said that productivity this year will increase at a similar pace as in 2018 - around 6%. CEO Herbert Diess said it another interview that the carmakers will increase reliance on hybrid cars as it moves towards electric driving systems. Diess also said that hybrid cars will play a role for a long time as charging infrastructure is still patchy.

BASF (BAS.DE) began construction of a production plant in China. The plant will be the company's third largest and BASF hopes it will meet high demand from Southern China’s high-speed rail, EV, electronics and footwear industries. BASF is the largest chemical producer in the world.

BASF (BAS.DE) gained around 25% since mid-August. However, the stock struggles with breaking above the 78.6% Fibo level of the downward move started in late-April. Note that in case the stock once again pulls back from the 78.6% Fibo level, potential head and shoulders pattern would surface. Potential range of this pattern points to a support zone ranging above the 50% Fibo level (€65). Source: xStation5