DE30: Downward revision to 2019 guidance pressures Infineon shares

Summary:
- Partial inflation data from Germany disappoints
- DAX (DE30 on xStation5) eyes break above the early-March swing level
- Bayer (BAYN.DE) lost second trial related to the Roundup weedkiller

Equities from China and Japan posted noticeable declines during Asian trading hours while shares in Australia managed to move higher. However, the beginning of the session on the Old Continent can be named as mixed. Stock in Spain, Italy and Russia underperformed while the UK and Portuguese companies advanced the most. Miners led higher while real estate companies were the biggest laggard in the first minutes of European trading.

DE30 continues to move higher after bouncing off the 50-session moving average. In case upbeat moods prevail we may see the index closing above the swing level from early-March (11500 pts area). However, a break above recent peak may be hard to achieve as combination of the 200-session moving average and the resistance zone guards the area. Source: xStation5

The German preliminary CPI reading for March is scheduled for release at 1:00 pm GMT. However, partial data from some lands released up to 9:00 am GMT offered us some insight into how the reading for the whole economy may look like. Already published partial releases:
- Saxony - Actual: 1.4% YoY, expected: 1.4% YoY
- Brandenburg - Actual: 1.4% YoY, expected: 1.6% YoY
- Hesse - Actual: 1.1% YoY, expected: 1.1% YoY
- Bavaria - Actual: 1.5% YoY, expected: 1.7% YoY

As one can see reading came in either in line or below expectations hinting that the reading for the whole German economy may also disappoint. Combining it with a miss in Spanish data, tomorrow’s reading for the whole euro area (10:00 pm GMT) may exert some pressure on the common currency.

Major European stock market indices after the first hour of cash session:
- DAX (DE30): +0.40%
- FTSE 100 (UK100): +0.74%
- CAC40 (FRA40): +0.39%
- IBEX (SPA35): +0.05%
- FTSE MIB (ITA40): -0.05%

DAX members breakdown at 8:56 GMT. Source: Bloomberg

Company News

Bayer (BAYN.DE) may trade under pressure today following another unfavourable court ruling concerning Monsanto’s Roundup weedkiller. Court in San Francisco ruled that the herbicide was the cause of illness of 70-year old farmer, who is said to have used the product for decades. The jury ordered Bayer to pay $5.3 million in compensatory damages and $75 million in punitive damages. As thousands of similar lawsuits wait for trial, Bayer may be set to pay fines worth billions of dollars. The company said it plans to appeal from the decision.

As Deutsche Bank-Commerzbank merger talks progress, more and more potential hurdles to the deal arise. One of such concerns is Commerzbank’s credit quality. The bank was granting loans with bigger ease then Deutsche and may now suffer from write-downs on its bond and loan portfolios in case the merger goes through. Additionally, Bloomberg reported that Commerzbank employees are all-against the tie-up saying that two lenders have no plan, vision or backing for the deal. Moreover, labour representatives said that some clients are already considering switching to other banks due to the planned merger. Paul Achleitner, Chairman of the Deutsche Bank’s Supervisory Board, said that the bank will provide more details on the state of merger talks on 26 April.

Infineon Technologies (IFX.DE) continues to be pressured by yesterday’s release of updated guidance for 2019. The company slashed  2019 forecasts for the second time since the beginning of the year. German company now expects 5.3% revenue growth compared to 9% expected as recently as in February. Semiconductor named deteriorating conditions in China and slowing global economy as the main reasons behind revision.

Merck (MRK.DE) is one of the best performing DAX stocks today. The German pharmaceutical company announced that it will invest €150 million over the next 4 year in increasing medicine manufacturing capacity in Switzerland.