Summary:

• European bourses begin flat the last session this week
• DAX could be prone to a rebound in the nearest future
• Bayer plunges following FY forecasts being revised down

The European indices have begun the last session this week in undecided moods following a gloomy performance seen both in the US and Asia. However, even as the yesterday’s sell-off could have daunted investors to some extent, the German DAX (DE30 on xStation) is approaching a crucial support zone which could be a springboard to a rebound in the nearest future. 

The German DE30 broke from an ascending channel yesterday what led to substantial losses. We cannot see any signs of a recovery at the moment however, we could expect a bounce from the area between 12116 and 12273. Source: xStation5

The German DE30 broke from an ascending channel yesterday what led to substantial losses reaching almost 2 percent. We cannot see any signs of a recovery at the moment, a long bodied candle that covered latest attempt on Wednesday suggests a further decline. The important demand zone is located very close to the spot price. Moreover, a 150 moving average supports scenario, in which we could expect a bounce from the area between 12116 and 12273. The closest resistance is a downward trend line and a lower band of the ascending channel.

The DE30 is trading a bit lower at the opening as Bayer weighs on the most. Source: Bloomberg 

Taking a look at Asian markets there were quite grim moods. The NIKKEI (JAP225 on xStation5) slid -0.92%, the Shanghai Composite (CHNComp) inched up 0.14%, the Hang Seng (HKComp) lost -0.7% while the Australian S&P/ASX200 was the weakest index and tumbled -1.66%. A poor performance of the JAP225 sparked a sell-off of the USDJPY which is slowly reversing at the beginning of the European session. 

Company news

The worst performing company within the German DE30 is undoubtedly Bayer (BAY.DE) following morning reports that the company expects a negative impact on fiscal year earnings from the Brazilian Crop Science Business. Bayer sees a one-time negative effect ranging from 300m EUR to 400m EUR on EBITDA for 2017. The firm decides to revise its forecasts due to unexpectedly high inventories of crop protection products in Brazil, at the end of the harvest season. 

On the other hand, Adidas (ADS.DE) is the best performing in early European trading owing to the news that the Threadneedle Investment Funds ICVC added the stock to its investments and exited DnB in May. The fund bought shares valued at 34.4 million British pounds. Following this report trading volume was 2.9 times the 30-day average for this time of day, according to Bloomberg.