Summary:

• DAX hovered around flatline on Wednesday mornings
• Banks’ were in the focus as earnings were published
• The index remains within a downward channel and eyes support at 12000

DAX hovered around flatline on Wednesday morning, as investors monitored mixed earnings reports and digested better-than-expected results from tech bellwether Apple. Surging euro has also taken its toll on the European stocks.

The euro leaped to a 2.5 year high of 1.1846 against the U.S. dollar in yesterday’s trading before easing modestly in the US dealing as the greenback’s slumped extended in the wake of President Donald Trump’s decision to fire his communications director, Anthony Scaramucci, after only ten days in the White House. The higher euro, the more expensive exports from Europe. That could weigh on companies earnings, so the fact that DAX was falling with rising euro shouldn’t be taken as a surprise.

German Banks were among biggest lossers in the morning as mixed results were published. source: Bloomberg

Banking stocks were slightly lower on Wednesday after mixed results from European lenders. Societe Generale said net profit slumped 28 percent in the three months through June, as the Paris-based lender was hit by litigation costs and stubbornly low-interest rates. Its shares slipped more than 3 percent.

In Germany, Commerzbank swung to a net loss in the second quarter amid weak markets and after booking job-related restructuring charges of about 807 million euros. The 637 million euro net loss at Germany’s second-largest lender after Deutsche Bank was greater than analysts’ expectations for a loss of 584 million euros. The bank said it is expecting a slightly positive net result for the financial year 2017.

As for the economic data, the Producer Price Index turned out to be mostly in line with expectations. Prices rose but a slightly slower pace in June (on YoY basis), but fell on MoM basis. However, an upward revision was seen to previous print. Overall the report shouldn’t have an impact either on euro or DAX.

Looking at the chart we may notice that the index has broken from the long term upward channel and is now moving within the short-term downward channel. What’s more, the index has also broken below a support at 12300 that is now a resistance. If the latter stands still, a move towards crucial support at 12000 should be expected.

 DAX remains in the short-term downward trend. A resistance at 12300 needs to be broken if the longer-term gains are to continue.