DE30: German carmakers under pressure once again

Summary:

• EU said to be considering 3% tax on online advertising revenues

• DAX (DE30 on xStation5) may extend downward move to 11315 pts

• Deutsche Boerse (DB1.DE) to extend futures trading hours

Major European stock indices opened mostly lower on Tuesday following rather downbeat Asian session. Stocks in Germany, France, Italy and Spain pushed lower at the beginning of today’s trade while the UK equities moved higher. Utility shares outperform while car makers and industrial take the biggest step back.

DE30 heads follower since the beginning of today’s session as moods on the global stock markets were spoiled. If the bearish sentiment is to prevail the German index may try to close yesterday’s upward price gap. In such scenario downward move could reach the 11315 pts. Keep in mind that the 33-period moving average on the H4 interval may prove to be a hurdle for sellers. Source: xStation5

The digital revenue tax was discussed in Europe for some time now. The latest leaks suggest that French and German governments proposed to first impose a 3% tax solely on the online advertising revenue. The proposal is said to be discussed today among the EU finance ministers. If all goes as planned it could be put under vote as soon as in February next year. However, it should be noted that no agreement was reached yet and all is the matter of discussion. If imposed the tax could hit firms like Google or Facebook as their revenues are heavily dependant on advertising proceeds. Online giants that do not rely too much on advertising, like for example Amazon, are likely to be spared at this point. Nevertheless, there are plans to impose taxes on this kind of entities as well.

Major European stock benchmarks after the first hour of trade:

• DAX (DE30): -0.49%

• FTSE 100 (UK100): -0.09%

• CAC40 (FRA40): -0.55%

• IBEX (SPA35): -0.46%

• FTSE MIB (ITA40): -0.21%

German car industry is once again pressured by tariff theme. Source: Bloomberg

Company News

Deutsche Boerse (DB1.DE) announced that it will change futures trading hours  The company will extend trading hours on its futures exchange by 6 hours starting from 10 December. In turn futures trading on indices, like for example DAX, will start with Tokyo stock exchange open (0:00 am GMT) and end with the close of the US market 9:00 pm GMT). The impact of the change on company itself is said to be minor as a 10% boost to trading volumes is likely to result in 1.6 percentage points of additional growth. Some critics argue that this move may increase price distortions as the trading will take place during hours in which volumes are much thinner.

The German car industry is taking a step back today. There are two main reasons behind this. The first one are words of the Chinese officials regarding scrapping tariffs on the US car imports. Chinese authorities poured cold water onto investors’ heads saying that they are mulling removing tariffs. This is important as earlier news suggested that the decision to remove levies was already made. Apart from that, German and the US officials said that scheduled meeting of the German car maker CEOs with Trump administration is not going to be about car tariffs. BMW, Daimler and Volkswagen are all trading lower today. Continental also can be found under pressure following a downgrade received at Jefferies.

Continental (CON.DE) continues to be pressured along with the German car makers. The stock opened much lower today on the back of downbeat news in the tariff theme as well as downgraded received from analysts’. The stock is trading 41% lower YTD and 48.5% below its ATH at €257.40. Source: xStation5