Summary:
- German states decided to deliver wage hikes to civil-service workers
- DAX (DE30 on xStation5) moves lower after higher opening
- Volkswagen (VOW.DE) is said to be mulling setting up production facility in Serbia
Trade optimism continues to steer trading on the global financial markets and pushes equities all around the world higher. Chinese indices are trading at the highest levels since mid-June 2018 while the S&P/ASX 200 (AUS200) sits just 2.3% shy of the 2018 high. Having said that, no one should be surprised that green was the color dominating quotation boards at the beginning of the European session. Equities from France and Italy were among leaders in the first minutes of trade while miners and IT stocks are among the best performing sector groups.
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DE30 (DAX futures underlying) opened higher on Monday but it began moving lower almost immediately after session launch. Given the latest steep advance of the German benchmark, we may see a correction in the nearby future. However, in case the price breaks back below the breakout level of 11560 pts, future of the short-term uptrend may be questioned. Source: xStation5
The German Association of the Automotive Industry (VDA) released a report on the expected investments of the German car sector over the next few years. The Association says that domestic automotive sector may spent as much as €40 billion in the next three years on expanding EV offer and enhancing charging infrastructure. Tougher EU carbon dioxide emission regulations are the main cause behind the shift towards the electric vehicles that for now are the most important and most vividly discussed topic on the car market. Apart from that, German companies will also spent big on self-driving cars. Speaking of autonomous cars quite an interesting trend can be spotted among global carmakers. Namely, longstanding rivals like Daimler and BMW, or Ford and Volkswagen are teaming up to leverage potential success.
Meanwhile, the German states reached an agreement to increase wages for around a million of public sector workers. Teachers, police officers and staff of nursing-homes are among employees entitled to wage boost. The decision comes after civil-service sector struggled to recruit new workers amid tight labour market and low salaries. Throughout the next 3 years wages will increase by a total of around 8%. While this can be seen as some kind of additional burden for the German economy it also has a scope to boost the common currency. Namely, pay rise may impact the European wage growth metrics that struggled as of late and effectively discouraged ECB members from considering a rate hike.
Major European stock market indices after the first hour of trade:
- DAX (DE30): +0.31%
- FTSE 100 (UK100): +0.33%
- CAC40 (FRA40): +0.66%
- IBEX (SPA35): +0.33%
- FTSE MIB (ITA40): +0.37%
Fresenius Medical Care (FME.DE) is the worst performing DAX member today. Source: Bloomberg
Company News
Stocks that used to be the ones most impacted by the ongoing China-US trade skirmish are taking a breath today following reports saying that the deal is getting closer. Automotive sector and IT companies can be named such stocks. Indeed, Infineon (IFX.DE) as well as German carmakers (Volkswagen, BMW and Daimler) are pushing higher today.
Speaking of carmakers, Volkswagen (VOW.DE) is said to be planning to set up a production plant in Serbia. The factory will have a potential output of 300k cars a year and a workforce of around 5000 employees. The project is said to consume as much as €1.6 billion with expected annual sales of €4.5 billion. The news were reported by Vecernje Novosti newspaper. However, authors of the report refused to name sources from where they got the information.
Fresenius Medical (FME.DE) is one of the worst performing DAX stocks today. The German company is underperforming following a Reuters report. Namely, the news agency reported that the US national healthcare schemes may start favouring home-dialysis rather than treatment carried out at clinics. In case this revelations are confirmed Fresenius Medical may be in trouble as it operates dialysis clinics and generates around 70% of its sales in the North America.
Reuters report exerted pressure on Fresenius Medical Care (FME.DE) stock price. As the company experienced steep rally during the past two months, today’s movement can be viewed as a correction. However, in case report gets confirmed Fresenius may be set to dive much lower. Source: xStation5
