DE30: European indices drop after Wall Street sell-off

• European indices trade lower

• DE30 tests 50% retracement of upward move started in mid-December

• Airbus row with Qatar Airways intensifies

European stock markets are trading lower during the final session of the week, following another day of strong declines on Wall Street yesterday. Almost all European blue chips indices trade over 1% lower at press time. Indices from Russia and Poland lag the most, dropping 1.6-17%, while equities from Spain and UK outperform, dropping "only" 0.7-0.9%. Economic calendar for the remainder of the day is light but traders should stay on guard around Wall Street open (2:30 pm GMT) as this was when major moves began in the previous days.

Source: xStation5

DE30 took a hit overnight and launched today's cash trading lower. The index is making another test of the support zone marked with 50% retracement of the upward move launched in mid-December 2021 (15,660 pts area). It looks like declines have been halted for now as bears struggle to push the price below the retracement. Should buyers manage to launch a recovery move from there, the resulting upward move may push the index up towards the 38.2% retracement (15,800 pts area). On the other hand, failure to bounce off the 15,660 pts area, may encourage sellers to make another attack and push the price below this zone. In such a scenario, 61.8% retracement in the 15,515 pts area will become support to watch.

Company News

Dispute between Airbus (AIR.DE) and Qatar Airways over grounding of A350 jets continues. Airbus claims that state-owned Qatari airline intentionally grounded its A350 jets in order to seek damage from Airbus. The European planemaker said that such a move was in Qatar Airways' interest as the company is struggling with depressed demand due to Covid pandemic. In order to put pressure on Qatar Airways, Airbus decided to terminate the order for A321neo jets placed by Qatari airline. A321neo jets are very popular and hard-to-get planes, and were expected to play an important role during the Fifa World Cup hosted by Qatar later this year.

Siemens Energy (ENR.DE) announced preliminary results for fiscal-Q1 2022 (calendar Q4 2021). Company said that revenue during the quarter reached €5.96 billion (exp. €6.27 billion) while EBITDA came in at -€57 million. Siemens Energy lowered its revenue growth forecast for fiscal-2022  and expects sales growth to be between -2 and +3% this year (down from between -1 and +3%). Company also said that rising input prices, i.e. energy prices, are likely to keep pressuring margins in 2022.

Analysts' actions

• Beiersdorf (BEI.DE) upgraded to "buy" at HSBC. Price target set at €110.00

• Munich Re (MUV2.DE) downgraded to "hold" at Societe Generale. Price target set at €290.00

• Bechtle (BC8.DE) rated "outperform" at Exane. Price target set at €69.00

• Cancom (COK.DE) rated "neutral" at Exane. Price target set at €65.00

Siemens Energy (ENR.DE) is the worst performing member of DAX index today. Company warned that rising prices are likely to cause losses at its wind-turbine division to mount and also lowered sales forecast for fiscal-2022. Company plunged below the lower limit of the trading range marked with 78.6% retracement of late-2020 rally (lower limit, €22.00 area) and 61.8% retracement (upper limit, €24.50). The next potential support to watch is marked with October 2020 low in €18.35 area. Source: xStation5