Summary:
- Theresa May wants to relaunch talks with Jeremy Corbyn
- DAX (DE30 on xStation5) pulls back at the beginning of a new week
- BMW (BMW.DE) warns about €1 billion charge for the European probe
Upbeat moods seen on the global stock markets at the end of the previous week did not last through the weekend. Stocks in Asia traded mixed on Monday and similar story was played out at the beginning of the European session. Stock from the Old Continent struggled for a clear direction in the first minutes of trade with Polish and Russian equities advancing the most while the German stock took the biggest step back. Miners led gains while carmakers underperformed the most.
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile app
DE30 (DAX futures underlying) broke above the resistance ranging 11800-11900 pts in the middle of the previous week. However, an upward momentum eased since and today we are observing a minor pull back. Note that it may be just a move towards the recently broken resistance and if this is so, bulls are likely to seek to regroup in the vicinity of 11900 pts handle. Source: xStation5
New week has just begun and the case with Brexit still remains unresolved. However, somewhat pleasant news surfaced over the weekend. Namely, Bloomberg reported that the UK Prime Minister Theresa May will seek to revive Brexit talks it held with the Labour Party leader, Jeremy Corbyn. Prime Minister May is said to be willing to bow to Corbyn’s proposal of setting up a permanent customs union with the EU in the aftermath of Brexit. In case two leaders reach an agreement there is a high chance that the Brexit process will finally move on past the UK parliament. However, it should be noted that Theresa May took a lot of criticism from other Conservative Party members for teaming up with Corbyn. Having said that, it is possible that such a cooperation may trigger an exodus of some of the UK hardline Brexit ministers. Nevertheless, if this is the price for getting the deal approved, it may be worth it. A special Brexit summit will be held this week and in case the UK lawmakers fail to make progress by then, they risk a long Brexit extension - EU Council President said that extension of as long as a year could be needed to reach consensus. For now, reaching an agreement between May and Corbyn seems as the only probable option of leaving the European Union with a deal prior to the summer holidays. Investors should follow Brexit headlines and look for any hints of potential progress in Corbyn-May negotiations.
Major European stock market indices after the first hour of trade:
- DAX (DE30): -0.45%
- FTSE 100 (UK100): -0.31%
- CAC40 (FRA40): -0.21%
- IBEX (SPA35): -0.60%
- FTSE MIB (ITA40): -0.27%
DAX members following the first 50 minutes of trade. Source: Bloomberg
Company News
BMW (BMW.DE) can be found among DAX underperformers today. The company announced that it may take a charge exceed €1 billion in the first quarter of the year. The charge is related to the ongoing European probe that seeks to find evidence of collusion between the German car manufacturers. BMW said that the charge will impact first quarter earnings and put pressure on margins.
Continental (CON.DE) is trading lower today following a downgrade at Kepler Cheuvreux. The financial services company lowered the recommendation for the stock from “buy” to “hold”. The one-year price target was lowered from €165 to €160 as well.
Fraport (FRA.DE) is one of the worst performing MDAX members today. The company was downgraded to underperform at Royal Bank of Canada and its price target was lowered to €65. RBC reasoned its decision saying that the bulk of the European airport operators trade at a premium at the moment and may find themselves under pressure as lower interest rates will bite into the allowed returns.
Fraport (FRA.DE) saw its share price decline by over 30% throughout 2018. The stock is trading around 11% higher YTD but previous upward moves were limited by the 200-session moving average (purple line on the chart above). In case bulls take control once again, the aforementioned moving average could be seen as the nearest resistance level to watch. Source: xStation5
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
