Summary:

• Major equity markets have started the session subtly lower irrespective of strong performance across Asian markets
• IBEX (SPA35 on xStation5) gives back its gains somewhat in anticipation of a key speech of Puidgemont 
• An ominous candlestick drawn on the German DAX (DE30) could challenge a further increase

European stock markets have started the day mixed despite the stellar performance seen across Asian markets where the Korean KOSPI turned out to be the sturdiest index there. On the other hand, the Spanish IBEX seems to be under some pressure as investors are awaiting a speech of Catalan leader Carles Puidgemont scheduled for the afternoon where a unilateral declaration of independence might be announced, on balance, that a scenario seems to be less likely when we take into account numerous protests which took place in Barcelona on Sunday.

The DE30 has drawn a bearish candlestick on a daily time frame which could put the brakes on further gains, at least for the time being. Source: xStation5

Technically, the DE30 drew a bearish candlestick during the first session this week which could dial back undue optimism of bulls and might bring about a pullback towards the nearest support area placed at around 12820 points. Let’s also add that the German index might be vulnerable to the higher euro in the short-term while the latter gained a foothold overnight. A bearish scenario may be a base case unless the price breaks a top of the yesterday’s candlestick at the end of the day.

On top of that, the Spanish SPA35 has opened lower chiefly on the back of renewed concerns over appearance of Catalan leader Puidgemont who could declare a unilateral independence. If so, it could be a massive blow to the Spanish stock market but a more peaceful result (negotiations with Madrid) seems to be more reasonable. Let’s also mention that the Spain’s 10Y yield has subsided from 1.8% to below 1.65% over the course of the recent days which has been a sign a reduced geopolitical risk. Should that a trend keeps on, it could be conducive to the Spanish stocks.

The DE30 has begun the day equivocally, Fresenius Medical Care (FME.DE) is the largest drag on the index. Source: Bloomberg

As we pointed out at out first post today, the Asian session brought quite broad-based gains with the South Korean KOSPI (KOSP200) being the most standout index. Besides, the NIKKEI (JAP225) edged higher 0.65%, the Hang Seng (HKComp) moved up 0.3%, the Shanghai Composite (CHNComp) picked up 0.25% while the Australian S&P/ASX closed unchanged.

Whipping through the European markets one could notice that the FTSE100 (UK100) is the best performing index (up 0.2%) despite strength of the pound being buoyed by an upwards revision in terms of labour costs. On top of that, the Italian FTSE MIB (ITA40) and the above-mentioned SPA35 are the most laggards losing 0.4% and 0.3% respectively. In turn, the German DE30 is trading lower 0.1%, the CAC40 (FRA40) is treading water whilst the EuroStoxx50 (EU50) is slipping 0.1%.

Company news

Fresenius Medical Care (FME.DE) is by far the worst performer within the DE30 in early trading even as analysts are upbeat as for the profitability outlook in Q3. Even as the stock is trading markedly lower it’s worth underlining that volume has been quite poor thus far which could mean that a decrease might prove just short-lived.