DE30: Infineon rallies after solid earnings release

• Stocks jump on coronavirus treatment rumours

• DE30 jumps above 13400 pts and reaches new weekly high

• Infineon (IFX.DE) surges on quarterly earnings report

Stocks in Europe are on the rise for another session in a row, thanks to a report on coronavirus drug breakthrough. Tech stocks, miners and carmakers lead advance in Europe. Equities from the Netherlands, Belgium and Russia are top performers. Infineon surges today after the release of the quarterly earnings report.

Source: xStation5

DE30 continues to surge following a break above the upper limit of the local Overbalance structure (yellow boxes). The index makes a big jump today, thanks to news on alleged discovery of effective coronavirus treatment. DE30 breaks above the 13378-13392 pts price zone with fashion and tests early-January peak (13435 pts). Today’s upward move is a very steep one therefore traders should keep on guard. A pullback could call for a test of the aforementioned price zone as a support and should the index break below it, bears may look towards swing level at 13275 pts. 

DAX members at 9:40 am GMT. Source: Bloomberg

Infineon Technologies (IFX.DE) reported earnings for Q4 2019. The German tech company reported an adjusted EPS of €0.17, higher than median estimate of €0.15. Revenue of €1.92 billion was 7.1% QoQ lower but in-line with estimates. Total segment profit of €297 million was over 20% higher than expected while total segment margin reached 15.5% (expected 13.3%). The company still expected sales to increase 3-7% in fiscal 2020 (ends on September 30). Close of Cypress Semiconductor acquisition is expected by the end of the current quarter or at the beginning of the next one. The stock is surging today and is additionally being boosted by good sentiment towards tech sector.

Adidas (ADS.DE) and Puma (PUM.DE) are on watch today after Nike (NKE.US) warned that coronavirus outbreak is likely to have a significant impact on operations in China. Nike shares dropped over 3% in US after-session trading yesterday. Adidas and Puma started the day lower but managed to recover.

Analyst actions

• MTU Aero Engines (MTX.DE) cut to “neutral” at JPMorgan. Price target set at €265

• Covestro (1COV.DE) cut to sell at Berenberg. Price target set at €32

• BASF (BAS.DE) raised to “hold” at Bankhaus Metzler. Price target set at €59

Shares of Infineon Technologies (IFX.DE) surge today on solid quarterly earnings report. The stock breaks above the resistance zone at €21.20 and eyes a test of YTD high at €22.10. Should the stock break above it, the next major resistance in line is €23.40 swing area. Source: xStation5