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XTB TRADEBEAT

DE30: Cautious beginning of the new trading week

Summary:

  • European equity markets have kicked off the day with moderate gains
  • Investors’ attitude hinges on an outcome of the ECB’s meeting
  • DAX (DE30 on xStation5) continues hovering around a critical technical level

Despite decisively reassuring macroeconomic data from the Chinese economy along with gains registered on Wall Street on Friday, European investors have remained quite cautious possibly awaiting the ECB’s meeting which is scheduled on Thursday. That event could exert a downward pressure on the euro as risks appear to be tilted to the downside.

link do file download linkThe DE30 is in limbo and is hovering around a crucial technical levels located at 12640 points. Source: xStation5

Looking at the technical analysis on the DE30 one could spot the price is continuously holding onto a resistance line at 12640 points. As for now, swings of the price seem to be closed between the above-mentioned resistance and a crossing of a long-term trend line along with a downward limit a channel. Until one of those level is broken, there should be no a greater volatility.

Let’s consider both scenarios. Firstly, the price could break out a resistance line, if so, it could move towards an upper limit of the channel. On the other hand, if there is a pullback beyond a critical cluster of two technical levels, it could lead to a corrective move toward a medium-term support area (a green rectangle on the chart). It’s likely that more decisive moves will come in on Thursday when the ECB’s meeting takes place. Until then, swings could be contained in both directions.

link do file download linkThe DE30 maintains slightly above the break-even with 19 stocks gaining and 11 ones losing. Source: Bloomberg

At the beginning, let’s glance at equity markets from Asia which were at odds with an appropriate direction on today’s session. While the NIKKEI (JAP225) closed up 0.09% and the Hang Seng (HKComp) added more or less 0.6%, the Australian S&P/ASX200 (AUS200) along with the Shanghai Composite (CHNComp) lost some ground. The former declined 0.15% whereas the latter trimmed 1.43% of its value.

Elsewhere in Europe, there are fairly mixed moods. The best index in early trading seems to be the FTSE100 (UK100) which is going up 0.45%. The Italian FTSE MIB (ITA40) is not far behind rising 0.33%. Nevertheless, remaining indices are flat with profits and losses ranging from -0.1 to +0.1%. To be precise, the DE30 is losing a mere 0.02%, the CAC40 (FR40) is increasing 0.1% and the EuroStoxx50 (EU50) is unchanged on the day.

Company news

In terms of company news there are no many of them. However, one needs to underline that Deutsche Boerse (DB1.DE) has been cut by RBC’s analysts from outperform to sector perform. The bank lowered its price target not noticeably though, from 105 EUR to 102 EUR implying a 5.6% increase from the last close. To be better informed investor let us add that the RBC’s price goal is 6.5% above the consensus average of 95.76 EUR. As for Friday, the company had 11 buy recommendations, 11 holds and just 2 sells. The stock is sliding 1% in early trading.

In turn, Thyssenkrupp (TKA.DE) is the best performing stock in the morning following news from China. The issue concerns Chinese steel-makers which, according to Bloomberg Intelligence (BI), should be focused on upgrading their product mix in order to meet rising domestic demand amid the country’s industrial upgrade. The BI points to building joint ventures with European and Japanese premium products such as Thyssenkrupp and Nippon Steel which could allow Chinese firms to acquire technological know-how and exposure to high-end customers. The stock is gaining more than 1% after the opening.

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