Linde AG and Deutsche Bank AG lead the Germany 30 lower as European equity markets selloff across the board. Bayer has warranted most of the headlines after it completed the acquisition of Merck & Co’s consumer care business. This increases the pharmaceutical company’s exposure to the ‘over the counter’ drug business, just behind Johnson & Johnson in size.
Over the course of 2014 the Germany 30 has made a succession of lower highs because it has struggled to counter both global issues like the Ukraine situation, and a eurozone yet to fully convince that its recovery is fully under way. In contrast to this EUR/USD has continued to climb and has once again broken above the $1.39 level. The European Central Bank has stated that it is watching the strength of the euro, and has stopped just short of stating what action it will take should it rise too much. The increased strength of the euro has weakened the attractiveness of German exporters and subsequently stifled the Germany 30’s ability to head higher.
Until the euro begins to weaken against the US dollar we feel the Germany 30 will be prevented from rising higher much, and the precedent of lower highs could last.