DE30: European indices erase gains and move lower

• European markets erase morning bounce

• DE30 reaches daily low at around 15,105 pts

• Munich Re and Volkswagen boosted full-year guidance

European stock markets launched today's cash trading with minor bullish price gaps. However, moods began to deteriorate after the beginning of the session and now the majority of the blue chips indices from the Western Europe trade lower. Polish WIG20 (W20) is today's outperformer from the Old Continent, trading 0.6% higher. Stocks from Austria, Sweden and the Netherlands underperform the most.

DE30 jumped over 400 points off the Tuesday's low. However, an upward move was put to a halt at the beginning of today's European cash session. Bulls attempted a break above 15,250 pts handle but were unable to deliver it. The index has pulled back below the 200-hour moving average later on and continued to move lower until it hit the 38.2% retracement near 15,105 pts. In case we see a break below this hurdle, a downward move towards the 50% retracement at 14,975 pts may be on the cards. Source: xStation5

Company News

Volkswagen (VOW1.DE) reported Q1 revenue of €62.4 billion (exp. €60.3 billion) and operating profit of €4.81 billion (exp. €4.15 billion). Carmakers decided to boost full-year forecasts. The company expects operating return on sales of 5.5-7%, up from previous guidance of 5-6.5%. Volkswagen warned that hit from semiconductor shortages will be more severe in the second quarter than in the first. 

Henkel (HEN3.DE) reported a 0.8% YoY increase in nominal Q1 sales, to €4.968 billion. Organic sales growth during the period stood at 7.7% YoY. Large discrepancy between nominal and organic sales growth results from negative FX developments. Company expects organic sales growth to reach 4-6% in fiscal 2021 while EBIT margin is seen in 14-15% range.

Munich Re (MUV2.DE) reported Q1 gross written premiums at €14.55 billion, slightly lower than €14.71 billion expected. Operating profit reached €798 million (exp. €782.2 million) while net income came in at €589 million. Munich Re said that thanks to better business prospects for reinsurers in 2021 it decided to boost full-year gross written premium forecast to €57 billion. Full-year consolidated profit is still expected at €2.8 billion. Company said it does not expect to conduct share buybacks in 2021.

Munich Re (MUV2.DE) dropped to the 200-session moving average and the upward trendline earlier this week. However, shares caught a bid today following a full-year forecast boost. It looks like the stock respected the lower limit of the market geometry and may be now set to recover from recent declines. Source: xStation5