After a sobering Friday that finished in losses being suffered across European indices, the week got off to a more optimistic start this morning with the DAX 30 opening 0.46% up on Friday’s closing level. A modestly positive session on Wall Street on Friday, which saw the three major benchmark indices return to gains, if smalls ones, the Dow Jones up 0.1% and S&P 500 and Nasdaq 0.2% each, was one cue for this the opening gains this morning. However, broad losses across Asian indices this morning did indicate that not all would be smooth sailing, especially with market participants unlikely to make many significant moves before Donald Trump’s address to Congress tomorrow. Clarity on Trump’s fiscal stimulus plans, such as a change to the corporate tax structure, are hoped for and several economic data releases are also due out of the U.S. this week.
Well into the afternoon, the DAX 30 is almost perfectly flat with Friday’s closing position having reached that level by midday and subsequently trading within a narrow range in fractionally positive territory. The day’s biggest change, up or down, has been seen by Deutsche Boerse, the company which manages the Frankfurt stock exchange. The company is down 4.53% at present, hit by reports that the merger with the London Stock Exchange, which has been in process for around a year now, may well fail to gain approval by the EU.
The proposed £24.5 billion merger was never expected to be easy and it was clear that major concessions would have to be made if it were to be given approval by the EU. However, the response of LSE to the most recent demand that it sell its 60% stake in the fixed-income trading platform MTS was that it was ‘disproportionate’ and that “acting in the best interests of shareholders, the LSE Board today concluded that it could not commit to the divestment of MTS." Unless a last-minute compromise on the stand-off is reached it looks as though the merger could be imminently called off.
Other than Deutsche Boerse, the number and extent of losses is limited. Steel maker ThyssenKrupp is the next heaviest faller, down 1.23%, followed by housing association Vonovia, down 0.96%. Other fallers include automaker Volkswagen, down 0.88%, medical care company Fresenius, down 0.74%, Deutsche Telekom, down 0.79% and FMCG giant Henkel, with a 0.55% loss.
Sportswear brand Adidas has seen the strongest gains today with the company up 4.25%. Among the DAX’s two banking constituents, Deutsche Bank is also performing well, up 1.38% and Commerzbank up by 0.61%. The other two automakers, BMW and Daimler, are doing better than peer Volkswagen and have respective gains of 0.37% and 0.17%. Energy utility E.On is among the better performers today with a 1.72% gain while peer RWE is up by a more modest 0.57%. Cement maker Heidelbergcement has a 0.68% gain..