Summary:

  • European indices have begun the day equivocally, the FTSE100 (UK100 on xStation5) drops on the stronger pound
  • DAX (DE30) has failed to break a short-term resistance
  • Thyssenkrupp (TKA.DE) declines more than 1.5% following a negative call

The European equity markets have begun the day quite mixed snubbing remarks coming from the ECB’s officials regarding the future of the bond buying program which is due to expire at the end of this year. On the other hand, one needs to underline that the German 10Y bund has slipped 3bpd after the opening which seems to be a contradictory response to the ECB’s rumors, however the euro has barely reacted thus far.

link do file download linkThe DE30 has failed to break higher despite a knee-jerk spike seen immediately after the opening. Source: xStation5

A technical view on the German DE30 remains sluggish irrespective of some commentaries related to the ECB’s QE which occurred earlier today. The traditional thinking is that the tighter financing conditions ought to be supportive of the single currency being underpinned by higher yields across the old continent whereas the stock market could be afflicted due to a slower pace of money flows. Nevertheless, the ECB is bound to nod to a further extension of the quantitative easing which should offset an effect stemming from lesser monthly purchases. All in all, the latest ECB’s remarks have been broadly neutral as of yet but the euro has lost some of steam since then which could be perceived as a chance for bulls on the German stock market. Once the price closes above 12985 points (at least at a H4 interval), it could spur more investors to engage in a long position.

link do file download linkLufthansa (LHA.DE), Thyssenkrupp (TKA.DE) and Bayer (BAY.DE) are among top movers in early trading on Friday. Source: Bloomberg

The Asian session brought broad-based gains with the Japanese NIKKEI (JAP225) being a leader and booking almost 1%. Besides, the Australian S&P/ASX 200 moved up 0.35% while the stock markets in Shanghai (CHNComp) and Hong Kong (HKComp) added 0.15%.

In turn, whipping through the European markets one could spot that the FTSE100 (UK100) is losing momentum being down 0.4% predominantly owing to strength of the British pound which gained a foothold yesterday following comments rising chances for a two year transitional period in Brexit talks offered the UK by the European Union. Otherwise, the DE30 is trading flat, the CAC40 (FRA40) is sliding marginally 0.05%, the EuroStoxx (EU50) is marching subtly higher ca. 0.1% while the Spanish IBEX (SPA35) is gaining 0.1%.

Company news

Thyssnekrupp (TKA.DE) is losing momentum in early trading as the stock has been cut by Kepler Cheuvreux analysts from hold to reduce with a lowered price target from 26 EUR to 21 EUR implying a 11% decline from the last close.

On the flip side, Bayer (BAY.DE) is increasing on the news the company is going to buy parts of Bayer Crop Science Unit for 5.9 billion EUR. The transaction is subject to the closing of Bayer’s acquisition of Monsanto and approval by relevant authorities but it’s expected to close in the first quarter of 2018.