Summary:

  • All major European indices have opened lower despite a record close on Wall Street
  • DAX (DE30 on xStation5) has respected a resistance thus far
  • Infineon Technology (IFX.DE) drags the index down

The European equity markets have started the day lower taking a leaf out of Asian investors’ book. It’s worth underlining that the record close seen across the US indices yesterday has been shrugged off so far. Let us also recall that the euro seems to be recoup its yesterday’s losses made in the aftermath of an increase of the US dollar. In turn, the latter gathered momentum following revelations from the White House as reportedly some discussions about tax cuts took place.

link do file download linkThe DE30 has rejected a possibility of a breakout of a key short-term resistance line. Source: xStation5

Technically, the DE30 failed to break a short-term resistance line placed at 12560 points. That level seems to have quite relevant importance given the price drew an evening start earlier. As for now, it constitutes a main hurdle for buyers to jump it over. Until the price hovers below that level, further gains are mostly contained. On top of that, it’s worth noticing that the price has kicked off the day with a small bearish gap even as Wall Street marked a record close seen in three major indices.

Having assumed that sellers will be able to keep a lid on the price in the nearest future, a move towards a 23.6% retracement might be on the cards. What’s more, there is no a major obstacle for sellers before a 38.2% retracement being supported by a huge bullish gap which occurred in the aftermath of receding risks related to the hurricane Irma. To sum up, until the price remains below 12560 points the base case appears to be a decline towards the above-mentioned Fibonacci retracements. Keep in mind that a possible reversal to the upside on the EURUSD might jeopardize bears on the DE30.

link do file download linkInfineon Technology (IFX.DE) is dragging down the whole index, Continental (CON.DE) is acting as a counterweight though. Source: Bloomberg

The declines which were made across the Asian indices seem to be slightly weird given the excellent performance seen on the Wall Street being fueled by remarks on tax cuts from US President Donal Trump. Let us explain that the lower tax rate is, the more cash flow companies may generate. That said, a rebound on the US stocks appears to be obvious. When it comes to the Asian indices, the Hang Seng (HKComp) proved the feeblest once again losing as much as 0.7%. Besides, the Shanghai Composite (CHNComp) edged down 0.4%, the NIKKEI (JAP225) moved down 0.3% whereas the Australian S&P/ASX 200 deducted 0.1% from its valuation.

Looking at the European indexes one could spot the mediocre performance in early trading. Namely, the DE30 is going down 0.25%, the CAC40 (FRA40) is slipping 0.25% as well, the EuroStoxx50 (EU50) is sliding 0.3% while the FTSE100 (UK100) is trimming 0.15% of its valuation. It has to mention that the Spanish IBEX (SPA35) is the most laggard in the old continent in terms of the developed stock markets dropping over 0.6%.

Company news

Looking into the breakdown of the German index one could notice that Infineon Technology (IFX.DE) is the poorest performer losing more than 1%. The stock is down owing to the recommendation from Goldman Sachs as the bank chose to cut the stock to neutral from buy with a new price target at 21.3 EUR.

On the other hand, Continental (CON.DE) is gaining over 1% after a surge seen in the shares of Autoliv, the world’s largest automotive safety supplier, in Stockholm yesterday. A 12% increase was fueled by the news that the company announced a plan to split and news upbeat financial targets.