DE30: Indices remain under pressure, DAX rebalancing announced

• European stocks trade lower

• DE30 tests 61.8% retracement of upward move launched in November 2020

• Daimler Truck Holding and Hannover Re to be added to DAX index

European stock markets are trading lower today after markets were shocked by an overnight fire at Europe's largest nuclear power plant in Ukraine. Nuclear agencies were quick to calm the world and say that no increase in radiation beyond normal levels was registered and that reactors at the plant do not seem to be in danger. Those assurances, however, did little to boost market moods and European indices continue to trade deep below yesterday's levels. Automotive, aviation and financial stocks are top European laggards today.

Source: xStation5

DE30 has erased more than a half of the gains made following US presidential elections in November 2020. Index is currently testing support zone ranging between 13,150 pts and a 61.8% retracement at around 13,250 pts. Note that as the index has already broken below the lower limit of the Overbalance structure (purple box), trend has reversed from a technical point of view. From a fundamental point of view, uncertainty around Ukraine conflict and its implications to the global economy are also putting pressure on asset prices. In DE30 breaks below the aforementioned 13,150-13,250 pts zone, a drop towards the 78.6% retracement in the 12,400 pts area cannot be ruled out.

Company News

Qontigo, provider of DAX indices, announced rebalancing changes to major indices that will go into effect on March 21. Siemens Energy (ENR.DE) and Beiersorf (BEI.DE) will be replaced in the DAX index by Hannover Re (HNR.DE) and Daimler Truck (DTG.DE). 

According to a Financial Times report, Deutsche Bank (DBK.DE) began review of its operations in Russia. The German lender is reviewing options available for its IT centers in Moscow and St. Petersburg that employs 1,300 people. Sources cited by Financial Times said that no decision has been made yet and it cannot be ruled out that no decision to halt or suspend operations in Russia will be made.

HeidelbergCement (HEI.DE) announced that it intends to buy its own shares worth €300-350 million in the second tranche of a buyback programme. Purchases will be made from March 7, 2022 until at least August 31, 2022.

Analysts' actions

• E.ON (EOAN.DE) downgraded to "hold" at Bankhaus Metzler. Price target set at €11.00

• Lufthansa (LHA.DE) upgraded to "hold" at HSBC. Price target set at €6.50

• LEG Immobilien (LEG.DE) rated "hold" at Stifel. Price target set at €117.00

• TAG Immobilien (TEG.DE) rated "buy" at Stifel. Price target set at €26.50

• Zalando (ZAL.DE) downgraded to "hold" at HSBC. Price target set at €2.50

Hannover Re (HNR.DE) failed to gain on news of its planned inclusion in the German blue chips DAX index. The German reinsurance company drops over 3% today and attempts to make a decisive break below a medium-term support zone at €148.50. If it succeeds, a way towards the next support zone in the €138.00 will be left open. Source: xStation5