Summary:

  • All major European equity markets have opened slightly lower following fresh North Korea-related tensions
  • DAX (DE30 on xStation5) could try to break a resistance once again
  • Deutsche Boerse to cap executive payment at 9.5 million EUR per person from this year

The European equity markets seem to be unimpressed with another burst of fresh tensions between the US and North Korea as the latter warned that a powerful test of nuclear weapon could take place in the Pacific Ocean. Although, the indices have kicked off marginally lower, they’ve already gotten upbeat readings of PMIs from France and Germany which could buoy the prices going forward (we’ll provide a more in-depth analysis on that topic in another post).

link do file download linkThe DE30 has opened lower but the gap has been already closed. Source: xStation5

Technically, the price action remains quite sluggish without any larger breakouts seen over the course of the recent days. At the opening the price opened lower marking a bearish gap, though it didn’t take too much time to close that gap entirely. Looking forward, the DE30 has to break 12600 points in order to ensure itself further space for fresh gains. However, it’s worth mentioning the EURUSD has gained a foothold when European traders have entered the day, hence even as a long-term correlation between those metrics is insignificant, it could be a short-lived drag on the German index.

Considering two possible scenarios one could say that the upside could be strongly contained as the 12670 points should constitute a hard obstacle for buyers. On the flip side, a breakout below a lower limit of a channel might hasten declines, however those could be halted in the vicinity of 12520 points.

link do file download linkThe breakdown of the German index points to limited swings across the stocks. Source: Bloomberg

Looking back to the Asian session we may conclude that Asian traders downplayed mounting geopolitical risks sparked by the North Korean regime. Although, the Hang Seng (HKComp) moved down 0.55% that a drop it shouldn’t be attributed to the North Korean thread as the underperformance has been seen for some time. Otherwise, the NIKKEI (JAP225) closed down 0.25%, the Shanghai Composite (CHNComp) slipped 0.15% and the Australian S&P/ASX 200 gained 0.5%.

In Europe, there have been negligible moves so far as they’ve ranged from -0.1% to +0.1%. To be precise, the DE30 is trading flat, the CAC40 (FRA40) is rising 0.1%, the EuroStoxx50 (EU50) is increasing 0.1% as well, while the FTSE100 (UK100) is sliding 0.1%.

Company news

According to Financial Times, Deutsche Boerse is to cap executive pay for board members at 9.5 million EUR per person from this financial year onwards. The stock has little responded thus far and it’s trading marginally lower.