DE30: German stocks struggle for direction

• European stocks seesaw at the start of the session

• DE30 bounces off the 200-hour moving average

• Deutsche Post, E.ON and Allianz released Q1 earnings reports

Stocks in Europe had a volatile start to the session. Indices opened lower but rushed higher later on and now most of European stock indices trade near yesterday's closing prices or slightly above. No major data releases are scheduled for today as US CPI data (1:30 pm BST) should not have much impact on equities.

German BaFin is sure banks can weather crisis

Felix Hufeld, President of the German BaFin, made some comments on the ongoing crisis and stability of the financial markets. Hufeld said that the crisis will reinforce problems banks were struggling with already. This will call for a thorough review of their business models once pandemic ends. Nevertheless, he also said that he is sure German banks can withstand the crisis but with "a few scratches" and that crisis is not posing a significant threat to stability of financial markets. German financial watchdog will not penalize banks for attempting to stabilize the economy and said that supervisory demands will gradually return to normality after pandemic ends.

Source: xStation5

DE30 dipped below the lower limit of the local market geometry yesterday but has found support at the 10,750 pts swing level. Moreover, 200-hour moving average (purple) additionally strengthened the support. Yesterday's cash close (around 10,825 pts) acts as a ceiling today and in case bulls clear this hurdle, an attack on 10,900 pts (50% retracement of February-March drop) could be on the cards. The aforementioned swing level and moving average are near-term supports to watch and they form a zone ranging between 10,750 and 10,770 pts. 

DAX members at 10:09 am BST. Source: Bloomberg

Deutsche Post, E.ON and Allianz are DAX members that released Q1 2020 earnings reports today.

Deutsche Post (DPW.DE) had €15.49 billion in revenue, marking a 0.9% YoY increase. EBIT of €592 million was 49% YoY lower. The biggest declines were spotted in the "Supply Chain" segment that saw EBIT drop 78% YoY. On the other hand, EBIT in the "Post and Parcel Germany" segment increased 47% YoY, to €334 million). The company maintained its medium-term forecast of at least €5.3 billion in EBIT in 2022. Deutsche Post said it may make some changes to its CapEx plans due to Covid-19 pandemic.

E.ON (EOAN.DE) said that it had €1.46 billion in EBIT in Q1 2020 (+24% YoY). Revenue increased 95% YoY to €17.7 billion. Adjusted net income came in at €691 million, marking a 6.3% YoY increase. Results were better or in-line with market expectations. However, the company had a negative operating cash flow of €400 million against positive €27 million a year ago. E.ON announced additional climate-friendly investments worth €0.5 billion. The German utility company said it is unsure how Covid-19 pandemic will affect its business but decided to maintain 2020 EBIT guidance (€3.9-4.1 billion).

Allianz (ALV.DE) saw its net income drop 29% YoY in Q1 2020, to €1.4 billion. Revenue increased 5.7% YoY, to €42.6 billion. Combined ratio for Property & Casualty business stood at 97.8% against 99.6% in Q4 2019, while operating profit dropped to €1.03 billion (-29% YoY). Operating profit in the Life & Health segment declined 25% YoY, to €819 million. Operating profit in the Asset Management segment increased 18% YoY, to €679 million. Combined ratio for natural catastrophes and Covid-19 sits at 94%. The company said it will issue a new profit target for 2020 once the Board revises planning for this year.

In spite of reporting much lower EBIT than a year ago, Deutsche Post (DPW.DE) is trading higher today. Stock of the company is approaching the resistance zone at €28, which halted the previous upward move. Breaking above it would pave the way for the next resistance in line - zone at €31. Source: xStation5