DE30 breaks above the 13,450-point barrier

•  DE30 breaks above the 13,450-point barrier

• Weak German retail sales data

• Covestro (1COV.DE) and Varta (VAR1.DE) lower the outlook for 2022

Market sentiment during this week's first trading session on European trading floors is relatively positive. The German DE30 is up 0.48%, the French FRA40 is gaining 0.29% and the Polish W20 is gaining 0.5%.

This week's first trading session on the European market focuses on PMI and ISM data readings for industry. In Germany, investors' attention was captured by the retail sales reading, which turned out to be the weakest since 1994. Excluding the automotive industry, annualized retail sales fell to -8.8% y/y from an earlier reading of 1.1% y/y and analysts' forecasts of -8% y/y. The German PMI index for Germany slightly beat analysts' expectations, coming in at 49.3 versus a forecast of 49.2 and an earlier reading of 52.

Source: Bloomberg

DE30 index chart, H4 interval. The blue-chip benchmark is seeing gains today and has broken out above the 13,450-point level. From a technical point of view, the closest supports are the previously mentioned barrier of 13,450 points and the exponential moving averages (blue, purple and gold curves). The psychological level of 13,000 points also remains an important point. The most important resistance remains the 13,680-point zone. Source: xStaton 5

News:

• Covestro (1COV.DE) shares are losing 2.8% today due to a downgrade of earnings forecasts despite a good preliminary result for Q2 (EBITDA came in at 547 million euros vs 508.5 million euro forecasted). The company is negatively affected by high energy prices and a deteriorating macro outlook, among other factors. The company lowered its EBITDA forecast by 16% due to above-average exposure to gas. Varta (VAR1.DE) also lowered its forecast, losing more than 16% today. The company reported a nearly 39% year-on-year decline in adjusted EBITDA in H1. According to preliminary data, the company generated revenues of €376.8 million in the first half of the year, against forecasts of €388 million. 

• The mood around Lufthansa (LHA.DE) is once again subject to concerns about the occurrence of further wage strikes. The VC pilots' union wants wage increases to offset the impact of rising inflation. This means that Lufthansa could be hit with shutdowns as early as next month. A strike would cause additional cancellations on top of the 7,000 flights the company has canceled this summer due to staff shortages.

Analyst's action:

•  Rheinmetall (RHM.DE) with recommendation raised to "buy" (previously "hold") by HSBC. Target price at €242 (+35% relative to HSBC's last recommendation). 

The largest percentage changes in the companies included in the DAX index. Source: Bloomberg 

 The most active stocks in the DAX index (DE30). Source: Bloomberg