DE30: German carmakers jump on strong sales figures

Summary:

• Senior bankers urge to complete the  European banking union

• DAX (DE30 on xStation5) moves higher above the resistance level at 12150 pts

• Commerzbank (CBK.DE) surges after an unbeat analyst action

After a brief pullback on Monday the US indices marched higher on Tuesday. In turn the S&P 500 (US500) once again closed above the 2900 pts handle. Upbeat moods were also visible during the Asian session as all the major benchmarks from the region pushed higher. The Australian S&P/ASX 200 (AUS200) added 0.46% and the Japanese Nikkei (JAP225) close 1.08% higher. Major Chinese stock indices are trading over 1% higher.

Almost every major European stock market index opened higher on Wednesday. Some weakness could be spotted among French and Italian companies in the first minutes of trade but the scale of a drop was minor. Once again the biggest gains were seen on the Polish stock market. Miners outperformed other European companies in the first minutes of trade while food companies and telecoms could be found among biggest laggards.

After some hectic swings during yesterday’s session DE30 managed to close above the resistance level at 12150 pts. The benchmark is slowly moving higher since the beginning of today’s session and in case the upbeat sentiment prevails it may be set to test the resistance zone ranging 12380-12420 pts in the next week. Source: xStation5

Two major events were held in Europe yesterday, Bloomberg European Markets Forum and a conference hosted by the French banking and insurance sector supervisor. Despite the former being held in Milan and the latter in Paris there was one topic that was highlighted at both events - banking union. Several senior bankers attended events as well as some ECB members. What all of the attendees agreed on is that the European banking union should be developed in order to allow the EU economy to develop. Jean Pierre Mustier, CEO of UniCredit, said that banks Europe have today are not able to support small and medium enterprises. He added that bigger banks (the result of the banking union) could boost this sector. Christian Sewing, CEO of Deutsche Bank, said that the completion of the banking union is crucial if the European banks want to compete with American and Asian giants. Elsewhere, the German Finance Minister, Olaf Scholz, reiterated this comments saying that large European banks could accompany large European companies and in turn allow the European capital market to develop further.

Major European stock indices after the first hour of trade:

• DAX (DE30): +0.13%

• FTSE 100 (UK100): +0.21%

• CAC 40 (FRA40): +0.21%

• IBEX (SPA35): +0.14%

• FTSE MIB (ITA40): +-0.07%

Commerzbank (CBK.DE) leads DAX gains after analyst report suggested that tie-up with Deutsche Bank seems more likely. Source: Bloomberg

Company News

Commerzbank (CBK.DE) can be found among best performing DAX stocks today. The company was upgraded at RBC to “outperform” from “sector perform”. The analysts raised the price target for the stock from €9.50 to €11. Moreover, RBC thinks that given a significant decline in the Commerzbank share price makes its takeover by the Deutsche Bank (DBK.DE) more likely. Let us recall that in the previous week the German Finance Minister, Olaf Scholz, said that he “could envisage” the merger of two banks.

BMW (BMW.DE), Volkswagen (VOW.DE) and Daimler (DAI.DE) are also trading higher today. The German carmakers benefit from the sales data for August released recently. The report showed that deliveries of the new passenger cars in EU and European Free Trade Association jumped 30% YoY in August. As a reason behind such surge one can name efforts of the European carmakers to sell as much of the inventory as possible ahead of the new emission-testing regulations. Regulations took effect on September 1.

Commerzbank (CBK.DE) is trading in the consolidation ranging between €8 handle and the 23.6% Fibo level (€9.32) of the decline started in late-January. Stock boosted by the Deutsche Bank tie-up news may be eyeing a test of the upper bound of the aforementioned trading range. Source: xStation5