DE30: Fresenius and Fresenius Medical surge after earnings

• European stocks pull back on coronavirus concerns

• MTU Aero Engines (MTX.DE) hints that outlook may change due to coronavirus

• Fresenius (FRE.DE) and Fresenius Medical (FME.DE) surge after earnings

Stocks in Europe opened with small bearish price gaps as investors got concerned over the rising number of confirmed coronavirus cases outside China. South Korea reported the first coronavirus-related death today. Stocks from Spain and Italy are top laggards while equities in Portugal, Belgium and Russia gain. Industrials and miners advance the most while insurers and personal good companies underperform.

VDMA expects further weakness in German industry

The Mechanical Engineering Industry Association (VDMA) said that engineering exports were 1.5% down in real terms in 2019. The Association expects further weakness in 2020. Speaking of coronavirus, VDMA said that it is too early to estimate the impact of the outbreak on global exports. However, it said that virus risk will not change the importance of China for the industry. Last but not least, the Association said that Brexit-related political risks had a major impact on exports to the UK.

Source: xStation5

DE30 pulls back today and distances away from the all-time high in the 13800 pts area. A point to note is that upward move was halted slightly below the 127.2% exterior retracement of the downward correction started on January 22 (13835 pts). This level should be viewed as the first resistance to watch in case we see a break above the all-time high. On the other hand, should the pullback continue, bears will find the first hurdle at 50-period moving average (red line, H4 interval). In case it is not enough to stop decline, final support at the lower limit of the Overbalance structure (13635 pts) will come into play.

DAX members at 9:52 am GMT. Source: Bloomberg

Fresenius SE (FRE.DE) reported full-year EBIT of €4.69 billion (exp. €4.64 billion) amid revenue of €35.4 billion (exp. €35.39 billion). Sales growth at constant FX rates is expected at 4-7% in 2020. Net income growth at constant FX rates expected at 1-5%. Fresenius Medical (FME.DE) also reported 2019 full-year results today. EBIT at €2.296 billion was unchanged YoY and 2% weaker than expected. Full-year net income dropped 2% YoY to €1.37 billion. However, Fresenius Medical confirmed 2020 goals. Both companies are DAX leaders today.

MTU Aero Engines (MTX.DE) reported full-year results with revenue growing 1.3% YoY to €4.63 billion (exp. €4.74 billion) and EBIT growing 13% YoY to €756.9 million, in-line with expectations. The company proposed a dividend of €3.40 per share. MTU expects operating income to grow by high-single digit percent in 2020 but warned that the forecast may change to account for the coronavirus outbreak impact.

Lufthansa (LHA.DE) is the worst performing DAX stock today. The company trades under pressure after Air France-KLM (AF.FR) warned that a hit from coronavirus outbreak may wipe €200 million from earnings.

Fresenius Medical (FME.DE) is making a leap higher today being fuelled by a decent earnings report for 2019. The stock jumped above the 200-week moving average (purple line) and tested the resistance zone at €81.40. The company still tries to recover from October’s drop triggered by profit warning. Source: xStation5