DE30 breaks below 10,500 pts as moods deteriorate

• Germany expected to extend lockdown until May 3

• DE30 breaks below 10,500 pts, market geometries in the spotlight

• Fitch downgrades Daimler (DAI.DE) to BBB+ with stable outlook

Stocks in Europe are pulling back as lockdown extensions hit hopes of quick, economic rebound. DAX breaks below 10,500 pts and erases yesterday's gain. Hard data for March from the United States (retail sales - 1:30 pm BST, industrial production - 2:15 pm BST) may be a source of additional volatility in the afternoon.

Virus data affected by Easter holiday

Coronavirus data from Germany has been improving as of late. The country has slightly above 132 thousand confirmed cases and the number of new cases reported has been declining for 6 days already. Having said that, it should not come as a surprise that more and more people call for easing of coronavirus restrictions. Moreover, social unrest is on the rise in the country with new reports of police officers being attacked while trying to enforce social distancing rules. However, lifting restrictions too early may trigger a second wave of infections and risks Germany going back to square one. Chief of RKI, the German federal agency responsible for disease control, admitted on Tuesday that Easter holidays affected counting of new cases. He added that so far there is no clear sign that numbers in Germany are improving. Recent reports suggest that Germany may extend lockdown until May 3.

Source: xStation5

Moods on the European markets are poor today. Stocks decline as coronavirus-related restrictions in major economies from the region are set to last until at least May. DE30 attempts to make a break below the support zone at 10,500 pts. Should it succeed, next support can be found at 10,385 pts - the lower limit of the local market geometry (yellow box). However, the key support can be found at psychological 10,000 pts, where the lower limit of a large Overbalance structure (red box) can be found as well as 200-hour moving average (purple line). A break back below could hint that an upward correction has ended and the market may be set for a longer downward move.

DAX members at 9:43 am BST. Source: Bloomberg

DHL, subsidiary of Deutsche Post (DPW.DE), said that the coronavirus outbreak negatively impacted its earnings in the first quarter of 2020. Nevertheless, the logistics firm managed to generate €200 million of profit according to preliminary results. Operating profit adjusted for restructuring costs stood at €1 billion and was around 25% YoY higher. The company will release a full quarterly report on May 12.

MTU Aero Engines (MTX.DE) is planning to slowly restart operations. Company suspended production for 3 weeks due to the coronavirus pandemic but now it aims to restart operations at its facilities in Germany. Capacity will adjust to demand and situation in supply chains. Short-time working scheme will apply starting from April 20 at a production plant in Munich and around 20% of employees are expected to return to work.

German government approved €3 billion in emergency loans for Adidas (ADS.DE). Company said that receiving the loan was conditioned on suspending dividends, buybacks and executive bonuses.

Fitch Ratings downgraded long-term rating for Daimler (DAI.DE) to BBB+ from A1 with stable outlook. This is still an investment grade.

Daimler (DAI.DE) drops amid risk-off tones and downgrade at Fitch Ratings. The stock is pulling back from the resistance zone at €31.00 and tests the 50-hour moving average (green line, €28.10 area). Majority support can be found in €26 area - 200-hour moving average (purple line) and upward trendline. Source: xStation5