DE30 approaches 11,000 pts as European markets try to recover

• European indices try to recover from yesterday’s sell-off

• DAX gains over 3% and approaches 11,000 pts

• Cypress Semiconductor and Infineon Technologies get merger green light from US regulator

European markets are trying to recover from yesterday’s sell-off following gains in Asia. Miners and refiners lead gains in Europe thanks to rebound in crude, natural gas and industrial metals prices. Automotive sector is also benefiting from improved moods. Utilities are European top laggards but they also trade higher as a group. Press conference of Donald Trump on a new stimulus measure is likely to be the key point of the day. However, exact timing is still unknown.

Germany aims to slow coronavirus spread with new measures

Number of confirmed coronavirus cases in Germany increases quickly. The country reported 184 new cases yesterday bringing the total to over 1,200. Moreover, the two first deaths were reported in the country yesterday. German authorities decided to implement a range of measures aimed at slowing the spread. The government plans to avoid large scale lay-offs by offsetting companies for wages during furloughs. Events with over 1,000 participants are also to be called off.

Source: xStation

German DAX made the biggest plunge since the global financial crisis yesterday. Downward move extended into after-session trading but was halted near 2018 low at around 10400 pts handle. The index is attempting to recover today and has managed to jump above 10900 pts. Looking for the potential resistance levels ahead, investors should focus on 11175 pts handle in the first place. This level is marked by 23.6% Fibonacci retracement of the drop from the top as well as price reactions from late-2018 and early-2019. The aforementioned 10400 pts is the key short-term support.

DAX members at 9:42 am GMT. Source: xStation5

The US Committee of Foreign Investment approved $8.7 billion takeover of Cypress Semiconductor (CY.US) by Infineon Technologies (IFX.DE). The decision may be seen as a relief after recent reports that said White House is mulling blocking the merger. The deal still waits for approval from Chinese regulator.

Deutsche Post (DPW.DE) made some upbeat comments on the impact of coronavirus. Frank Appel, CEO of the company, said that troubles are not over but some encouraging signs can be spotted. Namely, he said that the current situation is not similar to the one from 2008 and that business outlook in China is improving every day.

One of employees at Deutsche Bank (DBK.DE) headquarters in Frankfurt tested positive for the coronavirus. The Bank announced it will start implementing measures aimed at limiting spread of the disease. The Bank will split its sales and trading teams among different locations in Frankfurt and will order some from the staff to stay home for quarantine.

Analyst actions

• Merck (MRK.DE) raised to “buy” at Independent Research. Price target set at €128

• Henkel (HEN.DE) raised to “buy” at Bankhaus Metzler. Price target set at €87

• Bankhaus Metzler maintained “sell” rating for Lufthansa (LHA.DE). Price target was cut to €9 

Infineon Technologies (IFX.DE) jumps above the price zone at €16 today. The stock gains on the decision of the US regulator that allowed the company to merge with Cypress Semiconductor. Nevertheless, even despite today’s 5% gain the company is trading over 20% lower year-to-date. The nearest resistance can be found at the 200-session moving average (purple line, €18 area). Source: xStation5