Summary:

  • European equity markets have opened lower on risk aversion
  • DAX (DE30 on xStation5) smashed a crucial support line
  • Asian markets tumbled following a rout seen on Wall Street

The end of the week seems to be exceptionally stormy which has been sparked by geopolitics and another remarks coming from US President Donal Trump. He said that the statement (he delivered two days ago) maybe “wasn’t tough enough.” It added downside pressure to stock markets which plunged all around the world.

link do file download linkThe DE30 smashed a critical support line placed at 12080 points following menacing comments from US President. Source: xStation5

At first, let’s take a look at a daily time frame. The index shattered a relevant support line at 12080 points and closed just above a downward limit of a channel. Therefore, there is a likelihood of a short-term rebound towards a broken line, however a broader outlook seems to be not bulls-conducive. Even though buyers are able to retrace some of recent losses, it could be hard to see a more durable swing higher which would ignite hopes for extended upward moves.

link do file download linkA weekly time frame is set to close the week with an ominous candlestick suggesting a more durable loss to come going forward. Source: xStation5

A quick glance at a weekly interval could foretell tough time for bulls on the DE30 in upcoming weeks. The index is bound to close below 12300 points and could draw another bearish engulfing thereby even if bulls are able to climb shy of 12300 points but fail to break it out, it could be a compelling opportunity to take a short. Let us recall our broader view based on fundamental metrics for the German index which we presented a few weeks ago.

link do file download linkThe DE30 has kicked off trading lower but tried to wipe out some its losses at least to some extent. Source: Bloomberg

Let’s whip through the Asian session which brought a massive bloodbath with the Hang Seng (HKComp) leading losses as the index plunged all but 2%. Moreover, the China onshore index Shanghai Composite (CHNComp) tumbled 1.6%, the Australian S&P/ASX 200 lost 1.2% whereas the NIKKEI (JAP225) was closed today due to holiday.

The European stock markers uninterruptedly hold onto their losses which have been made at the opening. The DE30 is trading lower 0.3%, the CAC40 (FRA40) is declining 0.9%, the EuroStoxx50 (EU50) is going down 0.7% whilst the FTSE100 (UK100) is plummeting as much as 0.9%. The largest sell-off is seen in the Italian FTSE MIB which is falling almost 1.1%.

Company news

Looking into the DE30, thyssenkrupp (TKA.DE) is once again the worst performing stock which could be a belated respond to a negative cash flow figure which was reported yesterday. Furthermore, the company said that its net financial debt had surged as much as 32% which could raise some concerns whether the firm is able to service huge debt burden.

In turn, in terms of the best performer there is Merck (MRK.DE) which is rising moderately without a specific reason standing behind. However, it’s worth mentioning a recent recommendation from HSBC as the bank upgraded the stock to hold from reduce. That said, the price target was lowered marginally from 95 EUR to 94 EUR implying just a 1.3% increase from the close on Tuesday.