Summary:

  • European stock markets have opened higher as Wall Street has shrugged off a North Korean’s threat
  • German major index (DE30 on xStation5) eyes a broken support area
  • HeidelbergCement (HEI.DE) gains following a recommendation from Kepler Cheuvreux

Today is a big day for the euro and thereby the European indices as well mainly owing to inflation prints coming from Germany (reports from states will be released in upcoming hours). On the other hand, needles to say that Wall Street decisively played down possible risks stemming from the North Korea’s ballistic missile test which took place yesterday. For that reason, the European equity markets have kicked off the day with upbeat spirits.

link do file download linkThe DE30 is retracing yesterday’s losses but is still a long way off from a resumption of a bullish trend. Source: xStation5

Taking a look at the H4 chart we could presume that the price could try to test its broken support/resistance area placed at around 12090 points. However, even as buyers are able to break that level, it could not translate straightforwardly into a change in a trend. It stems chiefly from the fact that a descending trend line lurks just above the mentioned resistance area, thus the price would have to smash possibly both lines in order to convince more investors to put their money again into the German bourse.

Taking account of that scenario one could assume that a resumption of a decline towards 11800 points cannot be ruled out. So, if the price marks any ominous candlesticks in the vicinity of 12090 points, it could be treated as a compelling selling opportunity. Having said that, let us recall that the EURUSD has subsided perceptibly after yesterday’s wild increase, thus the DE30 could take advantage of it at least in the short-term. In this respect, the inflation prints from German states and the whole economy might be especially worth keeping a close eye on them. Moreover, a recent rise seen in the EURUSD could have been exaggerated by an uncommon reaction on the bond market as the US 10Y yield slid whereas the German bund stayed just little changed.

link do file download linkAlmost all stocks are in demand in the morning. HeidelbergCement is the standout stock within the DE30. Source: Bloomberg

An improvement in risk sentiment was already seen during the Asian session as the Antipodean currencies were the firmest ones within the G10 basket. Simultaneously, Asian stock markets marked another decent gains. The Hang Seng (HKComp) picked up 0.8%, the NIKKEI (JAP225) rebounded 0.75% while the Shanghai Composite (CHNComp) along with the Australian S&P/ASX 200 (AUS200) ended the day flat.

Looking at the European markets, there is getting broader exuberance. The DE30 is gaining 0.7%, the French CAC40 (FRA40) is increasing 0.6%, the EuroStoxx50 (EU50) is going up 0.6% as well while the British FTSE100 (UK100) is beefing up 0.45%.

Company news

HeidelbergCement (HEI.DE) has been the best stock within the German index so far following a recommendation from Kepler Cheuvreux. The company was upgraded from hold to buy with the new price target at 85 EUR (the spot price is at 79.2 EUR). It’s worth underlining that the Kepler’s call is still quite cautious as it sits 10% below the consensus average price at 94.81 EUR.

In turn, ProSiebenSat.1 (PSM.DE) is once again the worst performer after a gloomy session yesterday. The company was knocked down on Tuesday after cutting its guidance in German ad market. Today the stock is dropping on the back of a wave of grim calls. The firm was cut to hold by Bankhaus Lampe, Independent Research and Commerzbank.