DE30: Indices recover from post-CPI drop

• European trade little changed

• DE30 halts after yesterday's jump

• Bayer drops almost 5% after disappointing forecasts

European indices are trading little changed on Tuesday, following decent gains booked on Monday. German DAX and Italian FTSE MIB trade flat, French CAC40 and UK FTSE 100 drop slightly while Spanish IBEX and Polish WIG20 trade a touch higher. Equities fell under pressure earlier today, following higher-than-expected French and Spanish CPI readings. However, a bulk of these losses have already been recovered.

Source: xStation5

German DAX (DE30) took a hit at the end of the previous week and pulled back to the 15,200 pts support zone. However, fortunes have turned at the beginning of this week with European indices booking solid gains on Monday. DE30 bulls managed to defend the aforementioned 15,200 pts area and recover a bulk of Friday's losses yesterday. However, even a break below 15,200 pts would not make the outlook immediately bearish. From a technical point of view, a break below the 14,780 pts area, marking the lower limit of the Overbalance structure, would be required for a trend reversal. 

DAX movers. Source: Bloomberg

Company News

Bayer (BAYN.DE) reported Q4 2022 earnings this morning, ahead of the European cash session open. The German company reported revenue at €12.00 billion (exp. €12.04 billion) and core EPS at €1.35 (exp. €1.20). Adjusted Q4 EBITDA reached €2.46 billion (exp. €2.38 billion). Dividend per share was announced at €2.40. Bayer expects 2023 sales to reach €51-52 billion (exp. €50.85 billion) and core EPS to reach €7.20-7.40 (exp. €7.58). Adjusted EBITDA is seen at €12.5-13.0 billion in 2023 (exp. €13.2 billion). Disappointing profit forecasts are putting pressure on Bayer shares today, which are top laggards in DAX index.

Airbus (AIR.DE) expects Pacific countries - like Australia, New Zealand and their neighbors - to take delivery of 920 jets over the next two decades, with 750 of those being single-aisle jets. Airbus expects that half of new planes will be used as replacement for older models while the remaining half will be used for growth (expansion of fleet).

Recommendations

• Adidas (ADS.US) upgraded to "buy" at Berenberg. Price target set at €180

• Commerzbank (CBK.DE) upgraded to "buy" at DZ Bank. Price target set at €12.70

Ratings

• Fresenius SE (FRE.DE) affirmed at 'Baa-' at Moody's with outlook remaining "stable"

• Fresenius SE (FRE.DE) affirmed at 'BBB-' at Fitch with outlook remaining "negative"

Shares of Bayer (BAYN.DE) launched today's trading with a bearish price gap and continued to move lower in the first hours of the European cash session. Stock is under pressure from disappointing 2023 forecasts and trades at the lowest level in a month. Whether stock manages to defend or break the €55.85 support zone may be crucial for the future outlook. Source: xStation5