DE30: Fresenius jumps following a favourable court ruling

Summary:

• Merkel’s ally wins CDU leadership vote

• DAX (DE30 on xStation5) launches new trading week lower

• BASF (BAS.DE) plunges after issuing a profit warning

Steep declines were observed during today’s Asian session. Stocks in Australia and Japan plunged while shares in China fared just a little bit better. Having that in mind, major stock market indices from the Old Continent unsurprisingly opened lower on Monday. Swedish and Dutch equities were taking the biggest step back in the first minutes of the European session while French, Spanish and Swiss stocks were the most resistant to the downward pressure. Healthcare and real estate companies are among European leaders while chemical companies and miners lag the most.

DE30 continues a downward move from the previous week today. The German benchmark set a new 2-year low with today’s opening. In case bears continue to dominate throughout today’s session the next level to watch can be found in the vicinity of the 10430 pts handle as the price reacted to this level a few times during consolidation trading in late-2016. Source: xStation5

Christian Democratic Union delegates chose new party leader on Friday after the Chancellor Angela Merkel announced earlier this year that she would not be running for re-election. Annegret Kramp-Karrenbauer won in the run-off round against Friedrich Merz with 517 lawmakers backing the former and 482 supporting the latter. Kramp-Karrenbauer is one of Angela Merkel’s close allies in CDU structure and the outcome of the vote can be somewhat seen as Merkel’s victory. This is because Kramp-Karrenbauer shares similar views as Merkel in many key issues and her term is viewed as continuation of current Chancellor’s legacy. For example, Kramp-Karrenbauer is unlikely to scrap current German migration policy but she announced she will try to address all of the public concerns “step by step”. However, what is the most important outcome of the vote is that Kramp-Karrenbauer is most likely to be CDU’s candidate for the post of the German Chancellor once Merkel’s term runs out.

Major European stock markets after the first hour of trade:

• DAX (DE30): -0.99%

• FTSE 100 (UK100): -0.35%

• CAC40 (FRA40): -0.68%

• IBEX (SPA35): -0.69%

• FTSE MIB (ITA40): -1.05%

Fresenius outperforms its DAX peers after wining favourable court ruling in the United States. Source: Bloomberg

Company News

BASF (BAS.DE) is the worst performing DAX stock on Monday morning. The company issued a profit warning on Friday. BASF said that most likely its EBIT before special items will fall by as much as 20% this year. Let us recall that earlier BASF forecasted that the profit will decline by around 10%.

Fresenius SE (FRE.DE) is surging today. The company won favourable court ruling in the United States. The Delaware Supreme Court ruled that a rapid deterioration in Akorn’s (AKRX.US) generic drug business is sufficient reason for Fresenius to withdraw from taking over the company. The Akron’s business downturn became evident after the deal was announced but before it was closed. Let us note that Fresenius shares underperformed as of late as investors were concerned that the Akorn acquisition will turn out to be a drag and a hurdle for the German company.