European stocks take a dive, crucial breakout on DAX in sight

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  • European equity markets have begun trading with severe declines fuelled by trade war concerns. 
  •  DAX (DE30 on xStation5) nears its crucial long-term support area as the bearish trend seems to be unfolding. 
  •  Widespread declines within the DE30, Detsche Bank’s DWS Asset Management shares start trading on the country’s stock exchange.

There is nothing surprising that European equities have kicked off Friday’s trading with massive declines following the really hideous session in the US as well as Asia. Of course, those losses are fuelled by trade war concerns even as no particular details with regard to the new tariffs imposed on Chinese have been released so far. Trump informed that the details are to be announce over the course of the next 15 days, but it should not be a big market mover as it was today. Let’s have a look at a technical analysis for the DE30 which may raise some concerns as the index is nearing its particularly relevant support zone.

The German stock market seems to be slowly but surely moving deeper toward a bear market.
On the face of it, the DE30 seems to be constantly moving downwards after it failed to break above its important resistance line placed at 12460 points. The level was also enhanced by an upper boundary of a descending channel making it yet more harder to breach. When buyers were unable to move upwards there is nothing extraordinary that sellers have taken control anew. As a result, the German index is dangerously closing a significant demand area being marked by a 11800 points line. One may expect that a possible breakout of the mentioned level should lay the groundwork for further even more painful declines reaffirming that the bear market has finally commenced.

The VIX futures curve slipped into backwardation suggesting that investors expect heightened volatility in the short rather than longer-term.
In this respect it needs to mention the VIX futures curve which has slipped into backwardation of late (a really abnormal theme) heralding possibly heightened implied volatility in the shorter rather than longer term.

All stocks are falling within the DE30 in early trading on Friday.
The breakdown of the German stock market illustrates that there is no stock being able to resist a global sell-off. Deutsche Bank (DBK.DE), Deutsche Lufthansa (LHA.DE) and Linde (LIN.DE) are placed among the most losing stocks, however, those falls seem to not have something to do with internal issues they simply come from global moods deterioration. At the time of writing the DE30 is losing 1.5%, the French CAC40 (FRA40) is going down 1.4%, the EuroStoxx50 (EU50) is slipping 1.3% and the FTSE100 (UK100) is moving down 0.8%.

Company news
Even as Deutsche Bank (DBK.DE) is among the worst performing stocks in the German DE30 it coincides with a debut of DB’s DWS Asset Management on the country’s stock exchange. Namely, shares of DWS started trading at 32.55 EUR and according to a company statement the price was slightly below the mid-point of its initial target range of between 30 and 36 EUR per share. It’s worth mentioning that the DWS IPO was one of the largest German listings in recent years.