DE30: Not so bright future of the German manufacturers

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Possible strikes in Germany threaten domestic manufacturers 

DAX (DE30 ) bounces from the 13200 pts support level 

ProSiebenSat1 Media (PSM.DE) leads the gains after the upgrade from Deutsche Bank 

 

Following a clearly downbeat US session Asian equities traded mixed. Stock markets in Europe opened higher. Inconclusive wage negotiations between IG Metall union and some of the biggest German manufacturers may result in countrywide strikes.

 

DE30 edges higher after touching 13200 pts support level.

 

Taking a look at the DE30 daily chart one can see that the recent sell-off has been halted by the support level at 13200 pts yesterday. Following the session opening benchmark edged higher towards resistance level at 13330 pts handle. However, if the bulls want to reach this area firstly they have to overcome both 8- and 21-session averages that may act as the local resistance levels. On the other hand, if the recent gains were to erode later we may witness a more sharp pullback as there is no important support level in the close vicinity of the above-mentioned 13200 pts handle. The next support level lies at the 12900 pts handle and has proved its significance as a lower limit of the late-2017 consolidation range.

 

Yesterday’s US session was clearly bearish as all of the major benchmarks from Wall Street posted declines. Health-care stocks came under pressure after Amazon, Berkshire Hathaway and JPMorgan announced collaboration on the ways to offer their employees a health-care services. Another factor that may be contributing to declines is investors’ profit taking after the best January in over 10 years. In Asia trading was mixed as Chinese and Australian shares advanced while the Japanese ones slid. The Chinese Hang Seng CE (CHNComp) gained 1.3%, the Australian S&P/ASX 200 (AUS200) 0.25%, whilst Japanese Nikkei 225 (JAP225) traded 0.83% lower.

 

In Europe stock markets inched higher on the opening. The German manufacturing sector is going through a tough times as the wage negotiations between IG Metall and industrial giants, including Siemens and Daimler, failed to provide solution satisfying both sides. IG Metall is a union representing almost 4 million of German workers that has rallied around a million employees since the beginning of the year. As the talks were inconclusive workers decided to go on a series of a day-long strikes through whole Germany this week. Moreover, it is worth to stress the words of UK Prime Minister Theresa May relating to recent remarks about ousting her by her party members. Mrs. May said she is no quitter and that she has a longer job to be done. After the first hour of trade the German DAX (DE30) has gained 0.38%, the French CAC 40 (FRA40) 0.29%, whilst the UK FTSE 100 (UK100) has traded flat.

 

ProSiebenSat1 Media (PSM.DE) leads the gains after the upgrade from Deutsche Bank.

 

Company News

 

ProSiebenSat1 Media (PSM.DE) is leading the gains among DAX index components this morning. The reason behind this comes from the Deutsche Bank. The bank upgraded company to “buy” from “hold”. After the first hour of trade ProSiebenSat1 shares have traded 4.3% higher.

Infineon Technologies (IFX.DE) may be an interesting stock to watch in the nearby future, what can be accounted to the interview Bloomberg News has conducted with Veysel Taze, analyst at Oddo BHF. Taze said that the reduced sales forecast cannot be explained solely by the exchange rate issues as the company suggested. In his opinion Infineon is struggling with the growth stagnation in the core business. Combining it with the workers’ strikes that can be observed across whole country Infineon shares may come under pressure.