DE30: Deutsche Bank sinks to new all-time low

Summary:

• European Union summit begins tomorrow

• DAX (DE30 on xStation5) is testing the support level at 12150 pts

• Deutsche Bank (DBK.DE) slumps to new all-time low

Moods during the Asian session were rather downbeat. However, the declines were mostly observed on the Chinese stock market while in the other parts of the region the underperformance of the major indices was small. The Australian S&P/ASX 200 (AUS200) closed flat and the Japanese Nikkei (JAP225) moved 0.36% lower. In China Hang Seng (CHNComp) slumped over 2.3%.

On the Old Continent we have witnessed a mixed opening on Wednesday. Indices from UK, Germany and France launched today’s trade with an upside gap while Spanish and Italian benchmarks were trading lower. In the first minutes of the European trade refiners were outperforming other industry groups while telecoms and utility stocks were the biggest laggards.

The European Union summit begins tomorrow. The meeting will be attended by the top officials from the member states. Among topics on the agenda one can find Brexit, reform of the economic and monetary union as well as security of the bloc. On top of that European leaders will discuss migration issues and the outcome of discussion may be crucial for Germany given recent dispute among German governing coalition members. The event will last two days therefore traders should stay cautious as any news surfacing from the summit may influence European markets.

Major European stock markets after the first hour of trade:

• DAX (DE30): -0.65%

• CAC 40 (FRA40): -0.45%

• FTSE 100 (UK100): -0.1%

• IBEX (SPA35): -1.05%

• FTSE MIB (ITA40): -1.05%

 DE30 is currently testing the support level at 12150 pts. Source: xStation5

The German DE30 continues to move lower and lower breaking below subsequent support levels. The index is testing the support level at 12150 at the press time that has seen price react to it several times since the beginning of the year (orange circles on the chart above). Do notice that the bearish momentum is strong therefore this handle may be easily breached. In case such scenario materializes the next stop for bears may be the support zone ranging between 11800 pts and 11980 pts.

Deutsche Bank (DBK.DE) slumped today reaching the new all-time low. The Bank is down over 40% YTD. Source: Bloomberg

Company News

Deutsche Bank (DBK.DE) is the biggest underperform among companies included in the DAX index. The company announced that the head of the Japan asset management department is set to leave the Bank. However, this development does not seem to be strong enough to justify today’s sell-off of the Deutsche Bank shares. The scale of decline can be accounted to the long-present negative attitude towards the company. After the first hour of trade Deutsche Bank has traded 3.4% lower.

Covestro (1COV.DE) was outperforming other DAX components during Wednesday’s early trading. The company was subject to some positive analyst action. Namely, Baader Bank analysts upgraded stock from “hold” to “buy” saying that bullish management comments concerning second and third quarter of 2018 are likely to boost sentiment towards the company. However, the analysts noted that while they see Covestro as a good short-term investment opportunity they would not recommend it for long-term investors. Do notice that after higher opening the company’s share price slumped and after the first hour of trade Covestro has traded 0.3% lower.