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European assets surge after ECB move and ahead jobs data
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DE30 tested 12,700 pts
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Lufthansa (LHA.DE) will be removed from DAX index
European markets are pushing higher being supported by ECB's move yesterday. The European Central Bank decided to increase the size of its PEPP programme by €600 billion and to extend it to June 2021. German DAX tested the 12,700 pts mark earlier in the day, the highest level since February 26. Risk event to keep in mind while trading today is the US labour market data release at 1:30 pm BST.
German factory orders data for April was released at 7:00 am BST today. Report was expected to show a drop of 19.9% MoM but instead the actual reading came in at -25.8% MoM! This comes after previous month's reading of -15% MoM (revised from -15.6% MoM). This is a terrible print but April is expected to be the worst month of the current downturn so things should start to improve going forward.
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Source: xStation5
DAX as well as other European and US stock indices continue to march higher at neck-breaking pace. A look at the DE30 chart on a weekly time frame pictures how quick a recent upward move was. The index smashed through another important retracement today - 78.6% - and is trading just 8-9% below all-time highs. Next potential resistance to watch is the zone ranging between 12,900 and 13,000 pts. However, while this zone has been marked with numerous price reactions over the past 3 years, the index may ignore it due to persistent fear-of-missing-out on the current rally. Today's NFP report will be an interesting one as the US Bureau of Labor Statistics admitted there was some misreporting in the April report and revisions may be made with the US unemployment rate potentially jumping above 25%! Should a report disappoint and market pullback, the aforementioned 78.6% retracement (12,600 pts) may be on watch.
DAX members at 10:00 am BST. Source: Bloomberg
Lufthansa (LHA.DE) will be removed from DAX index, effective from June 22. DAX membership is based on free-float capitalization. After the German government takes planned equity stake in the company, Lufthansa will be ranked around 45th in terms of free-float capitalization on Xetra stock exchange. Deutsche Wohnen (DWNI.DE), real estate company, will move into DAX index while Lufthansa will become a member of mid-cap MDAX.
Hugo Boss (BOSS.DE) confirmed that it is looking for potential successors to CEO Mark Langer, who is set to leave the company's Board on September 30. The company is in talks with former Tommy Hilfiger executive Daniel Grieder.
US court blocked sales of herbicides with dicamba content. Ruling claims that companies who manufacture dicamba herbicides have substantially understated risks link to use of these products. Among companies whose products were blocked one can find Bayer (BAYN.DE) and BASF (BAS.DE). The announcement caused a pullback on Bayer shares yesterday.
Ceconomy (CEC.DE), the German electronics retailer, is surging today. Stock received a double upgrade at Baader Bank. Bank's analysts lifted the rating for the stock from "sell" to "buy" and boosted the price target from €2 to €4.
Bayer (BAYN.DE) was testing resistance zone ranging around the 200-session moving average (purple line) and 61.8% retracement of February-March sell-off earlier this week. Ruling from the US court caused a pullback yesterday but shares are regaining ground today. Source: xStation5
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