DE30: Bulls retreat after German court ruling

• European equities pull back after German court ruling

• DE30 drops below 200-hour moving average

• Lufthansa (LHA.DE) proposed to suspend dividend

Stocks in Europe had a good start to today's session with most of the indices from the region gaining. However, German court ruling on ECB QE actions dented moods and caused regional equity benchmarks to pull back. 

Bloomberg released an analysis of furloughs in Europe. According to the research, more than 40 million employees were furloughed due to pandemic and related restrictions. A point to note is that the analysis covers only the 6 biggest EU economies - Germany, UK, France, Italy, Spain and the Netherlands. Another interesting conclusion from the report is that in case all employees, whose job is at risk due to lockdowns, lose their job, the unemployment rate in those six countries could soar to as high as 42%! Of course, the worst-case scenario was avoided due to extensive stimulus programmes introduced by governments. However, this report shows how big the burden will be on public finances in the future.

Source: xStation5

DE30 recovered to trade at 10,700 pts handle at the beginning of today's cash session. However, ambiguous ruling from the German court caused quite a sharp pullback. The index tries to recover but faces resistance at 200-session moving average (purple line). Situation is parallel to the one we have analysed yesterday - with 10,500 pts (support) and 200-hour moving average (resistance) being key levels to watch. Note that current risk-off attitude may drag into US trading hours. On the data front, non-manufacturing ISM reading could spur some volatility for equities (3:00 pm BST). Breaking below the lower limit of market geometry at 10,500 pts would, in theory, signal trend reversal but one should also keep in mind that this level held strong yesterday.

DAX members at 10:14 am BST. Source: Bloomberg

Vonovia (VNA.DE), the German real estate company, released its Q1 earnings report ahead of the session open today. Adjusted EBITDA increased 6.1% YoY to €456.1 million while operating earnings (funds from operations) increased 10.5% to €333.5 million. Rental income increased 12% YoY to €564 million. The company is offering solutions for tenants who struggle to pay rent due to Covid-19 pandemic but also said that only 1% of tenants reported they are struggling financially.

Infineon Technologies (IFX.DE) also released an earnings report today. German semiconductor company reported revenue of €1.91 billion - flat year-over-year. Net income declined from €248.3 million to €178 million. EPS declined 40.7% YoY to €0.13. The company said it expects revenue of €1.9-2.3 billion in calendar Q2 2020 (€2.01 billion in Q2 2019). Investments in full-2020 are seen at €1.2-1.3 billion.

SAP (SAP.DE) found that some of its cloud products do not meet the company's cybersecurity standards. Situation is said to affect 9% of SAP customers. Company plans to fix issues in the second quarter of 2020 in order to meet contractually agreed security standards. Shares of the company are trading lower today.

Management of the Deutsche Lufthansa (LHA.DE) proposed to suspend dividend.

A look at the Infineon chart shows company trading in an interesting place. Share price pulled back after testing 200-session moving average (purple line) but found support at 50-session moving average (green line) later on. The latter moving average is a key short-term support as it coincides with the lower limit of the Overbalance structure. Break lower could call for a test of the support zone at €14.50. Source: xStation5