DE30: US mulls blocking Infineon-Cypress merger

• European markets slump, DAX at the lowest level since August 2019

• German factory orders data for January beats expectations

• US may block merger of Infineon Technologies and Cypress Semiconductor

European stock markets deepened decline today. DAX tested 11600 pts handle, the lowest level since August 2019. Coronavirus spreading continues to be the driver. NFP report is the main event of the day and it will be released at 1:30 pm GMT. Poor reading may cement expectations of more Fed rate cuts. Meanwhile, pre-virus German orders data showed a major beat.

DE30 failed to make a meaningful break above the resistance zone at 12200 pts (23.6% Fibo level). The index is pulling back today and  testing a low from the beginning of the week (11600 pts). Note that in case bulls fail to halt declines there, the index may move to as low as 11475 pts. Source: xStation5

Pre-virus factory orders data beats expectations

German factory orders data for January was released at 7:00 am GMT. Data release turned out to be a positive surprise as it showed orders growing 5.5% MoM against an expected growth of 1.3% MoM. The data marks a recovery from 2.1% MoM drop recorded in December. Capital goods orders were the driver. What is even more promising is the fact that foreign orders grew more than domestic ones. However, it should be noted that data relates to January therefore it does not capture any of the impact of the coronavirus outbreak.

DAX members at 9:18 am GMT. Source: Bloomberg

According to recent reports, Donald Trump has been briefed on security risk associated with merger of Infineon Technologies (IFX.DE) and Cypress Semiconductor (CY.US). Bloomberg news agency claims that national security advisers recommended blocking the tie-up. It is not known why such a recommendation was made. Cypress dropped over 15% yesterday on the news.

Trial over Bayer’s (BAYN.DE) Roundup weedkiller has been postponed by a judge in San Francisco. No specific reason behind postponement was offered but it is said to be linked to ongoing settlement talks. The trial was postponed until an unspecified date.

BASF (BAS.DE) signed an agreement with Fortum and Nornickel. Three companies plan to set up a battery recycling cluster in Harjavalta, Finland. BASF will use recycled materials in planned battery materials precursor plant in Harjavalta.

Shares of Airbus (AIR.DE) drop today after the company said it has recorded no new orders in February. European planemaker delivered 55 aircraft in February, up from 31 in January.

Analyst actions

• Vonovia (VNA.DE) raised to “buy” at Commerzbank. Price target set at €60

• Continental (CON.DE) cut to “sell” at Bankhaus Metzler. Price target set at €75

Infineon (IFX.DE) pulls back today on reports that merger with Cypress (CY.US) may be blocked. The stock dropped below 200-session moving average for the first time since November 2019 and may be set to test support at €16 unless moods improve. Source: xStation5