DE30: European investors welcome Tuesday in good moods

Summary:

• Financial institutions are eyeing a departure from London over Brexit uncertainties

• DAX (DE30 on xStation5) tries to recover on Tuesday morning

• Deutsche Bank (DBK.DE) to enlarge its financial crime department

Global equity markets launched new week in downbeat moods. In turn we saw steep declines across European benchmarks and later on the same game was played on Wall Street with Nasdaq (US100) plunging over 2%. During today’s Asian session we have seen a continuation of this trend but the pace of declines eased. Australian S&P/ASX 200 (AUS200) slid 0.2% while the Japanese Nikkei (JAP225) closed flat. In China Hang Seng (CHNComp) decline 0.55%.

European stock markets opened mostly in green with the German DAX opening 0.5% higher. Banks and miners were top gainers in the first minutes of the European trade while the travel and real estate companies were the biggest laggards. 

While the Brexit theme may not be on the top of the agenda right now the risks connected with it have certainly not waned. Given the importance of London as an international financial centre the financial institutions are getting more and more concerned over the lack of sufficient progress in the Brexit deal preparation. The EY conducted a survey among 222 large banks, insurers and asset management companies on their stance towards their current branches in London. Almost a third of surveyed institutions confirmed that they will cease their operations in London or are considering such move. The survey suggests that as much as 10000 jobs may move out of London over the Brexit uncertainty with Frankfurt and Dublin attracting most of them.

Major European stock markets after the first half an hour of trade:

• DAX (DE30): +0.5%

• CAC 40 (FRA40): +0.33%

• FTSE 100 (UK100): +0.26%

• FTSE MIB (ITA40): +0.47%

• IBEX 35 (SPA35): +0.35%

Bulls try to push DE30 higher. Reaction to 12355 pts handle could be decisive. Source: xStation5

The German DE30 (DAX futures underlying) is still pressured by the US-China trade spat. The benchmark has broken below the support level at 12355 pts yesterday. It seems like the index has found solid ground after sliding to the 12240 pts handle. Do notice the pinbar-like pattern (orange circle) painted in the 12300 pts area yesterday. While it may look like it was drawn in the middle of nowhere it needs to be stressed that the 12300 pts handle served as an upper bound of the consolidation range in mid-2017. Having that in mind the significance of this pattern may be greater than one have initially though. However, unless the price breaks above the 12355 pts mark a return of the downward pressure may be on cards.

The German stocks try to pare recent losses on Tuesday morning. Source: Bloomberg

Company News

As Brexit gets nearer the international companies that were also operating in the UK need to decide what to do. The German carmaker BMW (BMW.DE) announced that in case the upcoming Brexit deal will result in border stops it will close its production units in the UK in order not to slow down whole supply chain. After the first half an hour of trade BMW has traded 0.35% lower.

Deutsche Bank (DBK.DE) will take a bolder stance on the money laundering. The Bank announced that it will increase employment in its department connected to fighting financial crimes. The biggest German lender reasons decision saying that it wants to prevent criminals from using the Bank’s network to conduct financial crimes. Deutsche Bank has been criticized before by the US for its lack of internal controls. After the first half an hour of trade Deutsche Bank has advanced over 0.4%.