DAX goes nowhere, EMU inflation unexpectedly revised down

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  • After a brisk bounce seen in the past week the German stock exchange is likely to end the week without any particular changes. 
  •  EMU February inflation has been unexpectedly revised down on the back of lower food prices.
  •  Lufthansa (LHA.DE) leads the gains within the DAX (DE30).

The major European stock markets have kicked off the day not fat from away their yesterday’s close levels despite the newest revelations pointing to another impending reshuffle in the White House. From a technical point of view this week is unlikely to change the overall landscape for the German index as it’s still going nowhere being uninterruptedly trapped within a consolidation. Looking at the chart below one may notice that the price is exactly in the midst of its range trading therefore any imminent change of the current mode seems to be unlikely to happen any time soon.

The DE30 is going nowhere from a weekly time frame’s point of view, however, the price is still moving below a long-term trend line.

Barring any mind-bending events the German index is likely to close the ending week nearby the current levels meaning it’s going to stay far away from a more major breakout either to the upside or downside. The relevant resistance zone might be spotted at around 12900 points, and one may assume that it will be a hard nut to crack for bulls. Having said that, even as they broke this level to the upside the underlying downward trend would not divert as the ascending trend line remains a line in the sand. Therefore sellers seem to hold an advantage at least until the price stays below a 12900 mark. On the flip side, a move beneath 11800 points would pave the way for more severe declines which would be in line with higher borrowing costs being anticipated going forward as the European Central Bank is forecast to be unwinding its unprecedented monetary stimulus as soon as the next year.

Lufthansa (LHA.DE) is among the best performing stocks within the DE30 after two hours of trading.

Looking at the macroeconomic calendar for today there are no many relevant figures to watch for, however, the newly released final reading of EMU inflation has surprised to the downside. According to the Eurostat CPI grew just 1.1% in February slipping from 1.3% seen in the prior month and missing the initial print at 1.2%. The prime reason were lower food prices - the similar case was seen elsewhere as well. That said, the underlying trend stayed unchanged at 1% suggesting that ECB’s efforts to stoke inflationary pressure could bear fruit over the course of the oncoming months anyway. What deserves more attention if the fact that the average CPI rate has been 1.22% (after the data for two months) pointing to the lacklustre pace of price growth in comparison to the latest ECB staff macroeconomic projections looking for a 1.3% increase in the first quarter. If the forecast is to materialise, the March inflation data would have to exceed 1.4% (excluding rounding).

Company news

Lufthansa (LHA.DE) is gaining over 1.5% as the company has been upgraded by LBBW from sell to hold. The new price target has been also lifted to 28 EUR to 25 EUR. The company had 12 buys, 10 holds and 5 sells before today’s session.