Summary:

• European equity markets have begun the day with losses following mounting tensions between the US and North Korea
• Potential terror-related attack takes place in Paris
• Continental (CON.DE) rises following Deutsche Bank’s recommendation 

Equity market investors seem to abstain from buying riskier assets following mounting tensions between the US and North Korea at least at the beginning of trading. Poor moods were seen across Asian markets as well which could translate into a more extended decline in Europe.

The DE30 has already caught up on losses from the opening. Source: xStation5

Technically, even as the German DE30 has opened with a supply gap, it has already been able to catch up on most of losses just after 30 minutes of trading. Nonetheless, in order to be more convinced with regard to an extended improvement, the index should close the gap entirely, thereafter we could eye 12300 points once again as a potential short-term goal for bulls.

However, if bulls are unable to close the day above the unchanged, it could lead to further declines toward a lower limit of an ascending channel or even to 12080 points if the channel is broken ultimately. Keep in mind that a dispute between the US and North Korea escalates further, it could have an adverse and more long-standing impact on stock markets all around the world.

Almost all stocks listed on the DE30 are declining in early trading. Solely Continental, Muenchener and thyssenkrupp are being traded above the breakeven. Source: Bloomberg

Looking back to the Assian session, there is no doubt that investors were not fond of riskier assets such as stocks. The NIKKEI (JAP225) tumbled as much as 1.29% while the Hang Seng (HKComp) lost 0.87%. Two remaining major Asian indices the Shanghai Composite (CHNComp) and the Australian S&P/ASX 200 (AUS200) got over an increase of uncertainty. The former edged down just 0.19% whilst the latter managed to add 0.38%.

Taking a look at the European equity markets there are declines across the board. The French CAC40 (FRA40) is the worst performing one going down as much as 0.72%. It could come from a potential terror-related event which took place in the morning in Paris where the French soldiers were hit by vehicle at Paris suburb of Levallois-Perret. Elsewhere, the DE30 is slipping 0.6%, the EuroStoxx50 (EU50) is falling 0.6% as well, while the British FTSE100 (UK100) is trading lower 0.38%.

Company news

Looking into the DE30 one could notice that Continental (CON.DE) is the best performing stock in the morning following a recommendation from Deutsche Bank analysts who raised the stock to buy with a new price target at 230 EUR implying 21.1% upside compared with the last close. As for yesterday, the company had 19 buys, 11 holds and 3 sells.

On the other hand, we have two German lenders Deutsche Bank (DBK.DE) and Commerzbank (CBK.DE) losing the most within the DE30. Both are going down without any specific news standing behind it. Nevertheless, banks might be under pressure as the escalation of conflict between the US and North Korea could reduce odds for higher rates.