DE30: DAX in mixed mood ahead of German CPI reading

• DE30 awaits CPI report from Germany

• UBS reinforces sentiment around Bilfinger (GBF.DE)

•  E.ON shares (EOAN.DE) to buy at CITI 

Thursday's session on the Old Continent brings slightly better investor sentiment. The German DE30 remains relatively close to yesterday's closing levels and awaits the CPI inflation report from Germany, which will be published at 1 p.m BST. A little later, investors will learn macro data from the US, including the GDP reading and the consumer spending report. 

The mood in Europe during Thursday's trading session is overwhelmingly positive. However, this does not mean that there are no sectors with significantly worse sentiment. These include metals/mining and shipping. Source: xStation 5

The quotations of German DE30 contracts today remain slightly above yesterday's closing levels. On the other hand, the demand side has managed to break above the 50-day exponential moving average (blue curve), which may support the market bulls in the longer term. The key for further trading today will be the inflation data, which, if it surprises upwards, could prompt investors to realise short-term gains.  Source: xStation 5

News:

Citi has upgraded its recommendation on E.ON (EOAN.PL) shares to a 'buy' rating from an earlier 'neutral' in view of the projected margin expansion in the supply and network sector. Furthermore, the bank notes that E.ON has managed to pass on costs to customers without negatively impacting payment behaviour and forecasts a 'healthy level' of supply margins in the face of falling commodity prices. According to Citi, E.ON is trading at a near 16% premium to its total regulatory asset base. Target price at €12.7. 

E.ON (EOAN.DE) shares are currently testing the levels of the downward gap from 18 May 2023. Source: xStation 5

UBS also raised its rating on Bilfinger (GBF.DE) shares. A new rating of 'buy' with a price of €42 per share lifted the company's shares 11% higher today. As the bankers report, Bilfinger has upside potential ahead of it, and the 'buy' rating is encouraged by the favourable risk-reward ratio. This is primarily driven by improving orders and demand for services related to energy efficiency and decarbonisation. 

UBS notes that the company's current valuation values the EBIT margin at 4%, thus ignoring the potential for 5-6%. Plans put in place to improve margins through cost reductions and reducing exposure to risky projects are expected to support the shares going forward. The asset manager expects 2023 guidance to remain unchanged and the company to focus on generating FCF (free cash flow), which has been weak in recent years.

The company's shares have braked recent declines in the zone defined by the 50-, 100- and 200-week exponential moving averages. Source: xStation 5

Evotec (EVT.DE) shares rose 0.5% after the German biotech company received payment for the first patient taking part in a phase 1 trial of a programme co-developed with Bayer within kidney disease. The amount of €2 million, although small, is positive in terms of the EVT Innovate collaboration being developed.

Major percentage changes in individual companies of the DAX index. Source: Bloomberg

Information from individual companies in the DAX index. Source: Bloomberg