Summary:
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Equity funding in Europe declined significantly in 2018
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DAX (DE30 on xStation5) hovers a notch above 10500 pts handle
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Major banks, including Deutsche Bank (DBK.DE), targeted by the EU probe
Most of the European blue chips indices opened reasonably lower on the final trading day of the week. Stocks in the UK were exception as the FTSE launched session around 0.3% higher. Italian shares were underperforming the most in the first minutes of trade. Miners gained while car makers and telecoms lagged the most.
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DE30 (DAX futures underlying) heads into the year’s end with no signs of improving sentiment. The index paints consecutive lower lows maintaining a downtrend structure. The benchmark hovers a notch above the 10500 pts handle and may break lower any moment. The next support can be found in the vicinity of 10430 pts handle where some price action took place at the end of 2016. Source: xStation5
2018 was a tough year for the European economy. Uncertainties surrounding Brexit as well as deterioration in growth figures as well as the survey data made the outlook for the continent quite bleak. Equity markets underperformed for the bigger part of the year and it made investors more reluctant towards investing in stocks. European equity market funding fell by 38% over the year to just $142 billion. IPOs generated $41 billion proceeds, a 5% decline. However, it should be noted that global equity market funding proceeds also fell from $781 billion in 2017 to $688 (data since start of the year through 17 December). Nevertheless, a drop in Europe was by far the biggest one out of all regions. With global central banks set for more tightening in the next year the outlook for equity markets remains poor.
Major European stock indices after the first hour of trade:
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DAX (DE30): -0.59%
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FTSE 100 (UK100): -0.27%
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CAC40 (FRA40): -0.89%
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FTSE MIB (ITA40): -1.10%
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IBEX (SPA35): -0.57%
Deutsche Bank (DBK.DE) shares advance on Friday despite news EU probe. Source: Bloomberg
Company News
Deutsche Bank (DBK.DE), along with Credit Suisse (CSGN.CH) and Credit Agricole (ACA.FR), was targeted by the European Union authorities over suspicious activity in the sovereign bond market. The European Commission sent banks antitrust complaints over alleged exchange of commercially sensitive informations in 2009-2015 period. All three banks said they will cooperate with investigators. Moreover, Deutsche Bank said that it does not expect any fine to be imposed on it.
According to FAZ report, Volkswagen (VOW.DE) decided on significant jobs cuts as the company is making a shift towards e-mobility. The newspaper claims that the German car maker may reduce employment at its Hanover and Emden facilities by a third, around 7000 jobs. However, the report was not confirmed yet.
Adidas (ADS.DE) is slightly underperforming on the Friday morning after its major rival, Nike (NKE.US) published growth figures. According to the data Nike’s growth in Europe accelerated significantly earlier this year hinting that Adidas may lose market share in the Western Europe.
