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DE30 at new all-time highs!

10:10 11 November 2021
  • Most European indices opened lower but after two hours of trading are getting better
  • DE30 rebounded from16000 points and reached a new all-time high, close to 16100
  • RWE and Siemens reported good financial numbers from Q3

The start of the European session was rather mixed but after two hours of trading, most of the indices are declining. Weak sentiment on the market is probably due to inflation data from the US that may bring interest rates hike earlier than expected. It is interesting that the money market in Europe indicates that ECB will hike interest rates by 20 bps in December 2022. The Russian market is the worst performing and Sweden is the best. However, changes in both ways do not exceed 1%.

Moreover, there are ongoing worries over pandemics and the winter season in Europe. German Finance Minister Scholz said that some measured will be required to deal with winter. Further restrictions will probably subdue economic recovery and strengthen supply issues that generate inflation worries. Finally, winter is coming! Energy prices in Europe are higher once again, but nat gas prices are still considerably lower than in October. However, it may change very quickly because of low levels of inventories, especially in Germany. Russia is increasing gas output, but the amount transported to the EU was rather low in recent days. Russia said that is meeting all gas production contacts and by order of Putin, Gazprom increased its flow of gas to Europe yesterday which eased (for a while) concerns about tight supplies.

DE30 Technical Analysis:

DE30 once again rebounded from crucial support of 16000 points and after about one and half hours of trading, the index has reached a new all-time high above 16100 points. DE30 is supported by strong financial results from Siemens and RWE and also weak euro that is financing currency for German stocks. DE30 has probably broken above the narrow trading range (red rectangle). The next possible target for bulls is determined by 113.0 Fibonacci retracement of recent price correction in September and early October. On the other hand, support is still at 16000 points that is strengthened by 50 SMA. Crucial for bulls is maintaining a lower limit of upward trending channel.

Source: xStation5

Company News:

Siemens (SIE.DE) reported better than expected results during its fourth fiscal quarter. In the three months to the end of September, the company achieved sales at 17.33 billion euros that were 18% higher than a year ago. Market expectations indicated 16.82 billion euros. Orders increased by 26% to 19.07 billion euros in comparison to expectations at 17.56 billion euros. On the other hand, profit numbers came worse due to one-off gains reported a year earlier. Adjusted operating profit fell 14% to 2.27 billion euros and net income decreased by 29% to 1.33 billion euros. However, the company exceeded expectations annual net profit that reached 6.69 billion euros. The range of expectations was between 6.1 and 6.4 billion euros. The company expects that supply issues, especially in the chip market will ease next year.

RWE (RWE.DE) is the largest power producer in Germany and showed good financial results in the first 9 months of the year. The company showed a 6% rise in core profit in the first 9 months of the year. The company is clearly one of the top European renewable players which helps to achieve good financial numbers in the territory of increasing costs of power-producing (especially by carbon emission allowances). RWE is the second-best performing stock in DAX today.

RWE is still about 8.5% lower than in the last session of the previous year. Moreover, the price is in a sideways trend for about one and a half years. The price reached an important resistance zone today that is between 50.0 Fibo retracement and 34 euro price level. However, the price has eased a little after that. The key support is determined by price reactions close to 23.6 Fibo level. Source: xStation5

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