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European markets erase morning gains
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DE30 fails to break above 38.2% retracement
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Volkswagen cuts working hours at Wolfsburg factor
Stock markets in Europe launched today's trading higher but have already erased a big part of gains. Nevertheless, the majority of the blue chips indices from the Old Continent still trade higher on the day. Dutch AEX can be found among outperformers, gaining 0.6%, while German DAX drops 0.1% and is top laggard.
Releases of inflation data for September from European countries are key points in today's calendar. French reading in the morning turned out to be slightly weaker than expected - 2.1% YoY vs 2.2% YoY expected. Still, it was an acceleration from a 1.9% YoY seen in August. Italian reading showed 2.6% YoY against 2.4% expected, and up from 2.0% YoY previous. This is a major acceleration and a big beat similar to yesterday's beat in Spanish inflation data. Attention now turns to German print at 1:00 pm BST. Market expects acceleration from 3.9% to 4.2% YoY. Inflation in the euro area is clearly picking up but ECB is unlikely to make a quick move and rather waits to see whether any trend emerges.
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Source: xStation5
DE30 continues to struggle with breaking above the 38.2% retracement of a recent downward move in the 15,390 pts area. An attempt yesterday failed and the stock pulled back. After a recovery during the Asian trading hours another attempt was made today and once again bulls failed to break above. The 23.6% retracement remains a key, near-term support to watch (15,240 pts). Today's German CPI reading at 1:30 pm BST may be a potential mover for equities.
Company News
Volkswagen (VOW1.DE) decided to reduce working hours at its factory in Wolfsburg, Germany amid shortages of automotive semiconductors. Reduced working hours will last until mid-October.
Analysts' actions
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Porsche (PAH3.DE) rated "buy" at DZ Bank. Price target set at €100
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Norma Group (NOEJ.DE) downgraded to "hold" at Stifel. Price target set at €37
Porsche (PAH3.DE) launched today trading higher, near the 50-session moving average (green line). However, bulls were unable to hold onto those gains. Stock closed a bullish price gap and is now retesting the upper limit of the upward channel. As long as the price sits below upper limit of market geometry at €87.60, the bearish trend remains. Source: xStation5
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