European shares fill the gap, closing in a sea of Red as Sino/US cease fire agreement already looks obsolete

President Donald Trump’s claim that China will remove tariffs on U.S. autos doesn’t appear to feature in the declaration that was agreed by both sides over the weekend which is raising questions as to whether we are already back to square one again just a couple of day's into the turnaround in stock markets. Washington has already accused China of forcing technology transfers and tacitly supporting intellectual property violations and cyber-crime leading to the belief that the two parties do not quite meet over the more delicate details of the deal. Furthermore, the statements that the U.S. and China issued separately showed material divergences, with the Chinese statement making no mention of the 90-day deadline on the threatened 25 percent tariff increase. 

Meanwhile,  Brexit was a theme in the European session. The U.K. can overturn its decision to exit the European Union unilaterally, according to the advocate-general of the European Court of Justice. The top legal official, Campos Sánchez-Bordona, said that the UK could do so without the approval of EU member states so long as the decision is made within two years of triggering article 50, which would be in March 2019. This gave some relief for the pond, but it was limited by the market's concerns for how that might play out politically in the UK and public. One would expect resignations from the Conservatives and public unrest in the UK.  A general election would be the next likely risk for UK markets and new negotiations between whoever gets into power, Labour most likely, and Brussels.
Brussels would even push for the UK to join the euro. 

Best and worst

Meanwhile, for the DAX,  Linde PLC lead the index higher rising by 2.06% or 2.900 points to trade at 144.000 at the close. Beiersdorf AG O.N. put up 1.47% or 1.380 points to close at 95.140, and Vonovia SE  added 0.99% or 0.41 points to 41.84. The poorest performing in the index on Tuesday was Deutsche Lufthansa AG dropping 6.24% or 1.323 points to trade at 19.887 by the close. Continental AG O.N. fell 4.72% or 6.45 points to end at 130.10, and Covestro AG dropped 4.52% or 2.300 points to 48.580.

As for the FTSE, Banks, tobacco and mining stocks led the decliners. The pound's initial bid was also a weight on multinationals with sales in FX. Telecommunications stock took a hit, with Vodafone Group PLC VOD, -2.24%  falling by 1.8%. Mining stocks were also down, with Glencore PLC GLEN losing 1.7% and Rio Tinto PLC RIO, down by over 1.%. Financial was a drag also, with  HSBC Holdings PLC also falling by 1%. British American Tobacco Group PLC BATS fell slid 1.7%. Oil stocks were in the green with BP PLC rising by 2%, and Royal Dutch Shell PLC ended up by 0.2%.

Technical levels:

DAX: The DAX trades with a bearish bias on the charts with the index back below the gap and the 21-D SMA and 11207 as the recent lows has opened up scope for a run to the 11007 level as the 19th Nov low. 10860 comes as the 2016 Aug-Nov level as the critical downside target. On the flipside, bulls need to get back above the 50-D SMA and confluence of the 23.6% Fibo target at 11617. 

Support levels: 11400 11347 11263

Resistance levels: 11538 11622 11676

FTSE: From a technical perspective, the index is now back below the 23.6% level at 7091, and the descending resistance line/ turned fragile support as the index moves down into the channel formed between the September swing low and high building the starting points for descending support and resistance. The 4-hr downside target is located at S3 6929, below the 30th Nov low of 6959. Should the descending channel's typical price action play out, the index is destined to break the YTD low of 6915 as a key downside target. On a break back above the 21-D SMA, the 38.2% Fibo of 2018's range at 7244 is the primary objective. Initially, the next barrier to cover come is the 50-D SMA at 7117, which the price needs to hold above having scored a high of 7146.93 on the session on Monday.

Support levels: 7032 6986 6929

Resistance levels: 7135 7192 7238