DE30: Deutsche Bank reports annual loss for 2019

• European markets take a dive as virus concerns return

• DE30 moves back above the upward trendline

• Deutsche Bank (DBK.DE) reports annual loss for 2019

European stock market indices are taking a step back today as coronavirus concerns returned to the markets. Declines can be spotted all across the Old Continent with French and Italian shares being top laggards. 

Data from German states point to acceleration in price growth

Some data from the German economy has been released today. Unemployment in January decreased by 2k while markets expected an increase of 5k. The unemployment rate remained unchanged at 5%. However, markets are more focused on flash CPI reading for January that will be released at 1:00 pm GMT. Markets expect an acceleration from 1.5% YoY to 1.7% YoY. Price growth data from German states released so far supports this view:

• Saxony: 1.8% YoY (1.4% YoY previously)

• Brandenburg: 1.7% YoY (1.8% YoY previously)

• Hesse: 1.9% YoY (1.5% YoY previously)

• Bavaria: 1.5% YoY (1.3% YoY previously)

• North Rhine: 1.8% YoY (1.7% YoY previously)

Source: xStation5

DE30 tested the lower limit of the Overbalance structure at the beginning of today’s cash session. Bears failed to break below and the index moved back above the upward trendline. Zone ranging below 13290 pts handle is the nearest resistance to watch. The first support level one should focus on in case downward move is resumed is the aforementioned trendline (13215 pts area). Final support lies at the lower limit of the Overbalance structure (area near 13150 pts). As there are no major data prints scheduled for today (CPI data is unlikely to have a major impact on stocks), one may expect European indices to ride the sentiment in the first half of the day. Elevated volatility may surface at 1:30 pm GMT when the United States will release GDP figures for Q4 and at 2:30 pm GMT when Wall Street opens.

DAX members at 9:57 am GMT. Source: Bloomberg

Deutsche Bank (DBK.DE) reported earnings for Q4 2019 ahead of today’s session open. The German lender reported a loss of €1.058 billion in the final quarter of 2019 and a loss of €5.7 billion for full-2019. Both figures came in below market expectations. 2019 revenue of €23.462 billion marked a 16.5% YoY decline. However, the German bank managed to significantly increase fixed trading revenue in Q4 2019 (+31% YoY) - a theme that was common among US banks in the quarter as well.

Handelsblatt reports that Bayer (BAYN.DE) is considering stopping sales of Roundup weedkiller to individual consumers. The German company is in the midst of talks to settle thousands of US lawsuits with plaintiffs saying that the product is carcinogenic.

Tagesspiegel reports that cabin crew union Ufo is set to announce strike today. Talks between Ufo and Lufthansa (LHA.DE) broke down overnight.

Yesterday we wrote about an upbeat earnings report from Apple that has boosted the European semiconductor sector. Today's situation is completely opposite and earnings from Samsung are said to be the reason. The South Korean company reported profit that was 38% YoY lower and said that falling memory chip prices were the reason. Infineon (IFX.DE) is among companies impacted by the release.

Analyst actions

• Covestro (1COV.DE) raised to “buy” at Societe Generale. Price target was €45

• BASF (BAS.DE) raised to “buy” at Societe Generale. Price target was €72

Infineon (IFX.DE) opened significantly lower today but is trying to recover after finding support at 50-session moving average (green line). The nearest levels to watch can be found at €21.20 (resistance) and €19.95 (support). Lower limit of the Overbalance structure (final support) can be found at €18.51. Source: xStation5