Summary:

  • European equity markets plunge across the board following the North Korean missile test
  • DAX (DE30 on xStation5) tests August’s lows while EURUSD soars above 1.2050
  • ProSiebenSat.1 being smashed after cutting its guidance for the German TV advertising market in 2017

After a few weeks of relative calm, North Korea has reignited another havoc across financial markets launching its ballistic missile directed towards Japan. Let us recall that there were no missile tests after the UN Security Council imposed some sanctions at the beginning of this month. It has been seen by investors as another step taken by the Kim Jong Un’s regime towards a nuclear war. It’s been enough to spook investors across the board. In effect, riskier assets are in a tremendous retreat whereas gold, CHF, JPY all soar as investors have rushed to so-called safe haven assets.

link do file download linkThe DE30 marked an outstanding bearish candlestick smashing a lower boundary of a triangle formation. Source: xStation5

Technically, the DE30 has smashed a lower boundary of a triangle formation with gargantuan momentum. As a result, the price has already moved beyond this month’s lows and could eye 11800 points where a 38.2% retracement is placed. Even as that kind of declines (sparked by geopolitical frictions or terrorist attacks) tend to be temporary, it’s been a subsequent one over the course of recent weeks hence market’s patience could be running out.

link do file download linkA daily time frame suggests that the price could go as low as the nearest support area located at around 11400 points. Source: xStation5

Given so massive moves, it’s worth having a look at a daily interval which indicates that the ongoing rout could persist during days or even weeks to come. That said, if sellers manage to break 11800 points, they could try to pull the price down towards 11400 points, the level underpinned by a 50% retracement of an upward move measured from the US presidential elections. Keep in mind that the sell-off is being fueled by the rising euro which is up almost 0.7% against the greenback. Let us remind that we’ve already mentioned such relationship presenting our broader view with regard the the German index. Since then, the price has declined more than 400 points.

link do file download linkAll stocks listed on the German DE30 drop with ProSiebenSat.1 being the largest loser. Source: Bloomberg

Even as the European stocks are being sold-off across the board, there have been less concerns in Asia. Thus, declines across the Asian equity markets were not so heavy with the Australian S&P/ASX 200 (AUS200) being the worst performer and losing 0.7%. Besides, the NIKKEI (JAP2225) slipped 0.45%, the Hang Seng Composite (HKComp) moved down 0.4% while the Shanghai Composite managed to add 0.08%.

Whipping through the European markets, a bloodbath can be seen in every one. The DE30 is plunging 1.8%, the CAC40 (FRA40) is tumbling 1.45%, the EuroStoxx50 (EU50) is nosediving 1.4% while the FTSE100 (UK100) is falling ’just’ 1.3%. Let’s add that the US futures do not suggest so dismal performance as the SP500 future is declining 0.8%.

Company news

German broadcaster ProSiebienSat.1 (PSM.DE) is drawing the most attention in early trading as it’s dropping as much as 11%. The hefty decline is the aftermath of the company’s report. The firm decided to cut its guidance for the German TV advertising market in 2017 to flat in a year-over-year basis from previous guidance for growth at the lower end of 1.5%-2.5%. The stock isn’t the sole which is being so heavily sold-off, for one, RTL group is dropping as much as 8.3%.

Otherwise, Thyssenkrupp (TKA.DE) is going down more than 3% as well after the Bucephalus Research Partnership report. The research company said that the stock is an “overpriced option on the company’s current capital structure”. It sees fair value as closer to 4.94 EUR which would imply a remarkable decline as the spot price is at 24.4EUR.