DE30: Risk-off gains after oil market turmoil

• Equity markets drop after epic oil market crash

• Double top pattern on DE30 chart

• SAP (SAP.DE) sees strong increase in cloud revenue

Crash in front-month oil prices yesterday reminded markets of how bad the situation in the physical oil market is. Let's recall that the WTI contract for May delivery settled at -$37.63 yesterday. Equity market sell-off began in late afternoon yesterday and it is being continued today. DAX trades 2% lower. Declines on most of the European exchanges range from -1.5 to -2.5%.

ZEW indices for April were released at 10:00 am BST. Expectations index jumped from -49.5 to +28.2 pts (exp. -42 pts). Current situation index dropped from -43.1 to -91.5 pts (exp. -77.5 pts).

External EU borders likely to stay closed until summer, Oktoberfest cancelled

Coronavirus-related lockdowns are still in place but some countries are taking steps to start lifting them. For example, Italy plans to start gradually reopening the economy from May 4. However, one should keep in mind that when it comes to the European Union, there are some decisions that need to be taken at a group level. Thierry Breton, EU internal market commissioner, said that the Schengen area and external borders of the EU are likely to stay closed until summer. Should closure extend into summer, it could be another hit to an already dying travel industry.

In other news, it was reported that this year's edition of Oktoberfest has been cancelled. This will be a big hit to the Bavaria economy, where the festival is held. It is estimated that Munich city alone gets around $1 billion each year from the Oktoberfest.

Source: xStation5

DE30 did not break out of the Overbalance structure but managed to break below the support zone at 10,500 pts. Following a retest of the zone ahead of the European cash session open, the index turned lower once again. Area above the 10,400 pts is proving to be a support for now but should it break, the attention will shift to 10,200 pts handle. This level is marked by previous price reactions but more importantly it is also a neckline of the double top pattern. Potential range of this pattern points to the 9,650 pts area so a break below 10,200 pts could see some additional selling. Bulls will attempt to bring the price back above the 10,500 pts zone.

DAX members at 9:44 am BST. Source: Bloomberg

SAP (SAP.DE) announced first quarter earnings ahead of the session start today. The company cloud revenue jumped 29% YoY to €2.01 billion while combined revenue for cloud and software segments increased 7% YoY to €5.39 billion. Total revenue increased 7% YoY to €6.52 billion. Backlog of cloud orders increased 29% YoY. EPS jumped to €0.68 from -€0.10 in Q1 2019. Overally, the earnings report was a strong one and continued improvement in cloud business can be especially beneficial during the Covid-19 pandemic and stay-at-home push.

Fitch Ratings downgraded Continental (CON.DE). Rating agency lowered the long-term credit rating for the company from 'BBB+' to 'BBB' with a stable outlook.

Deutsche Bank (DBK.DE) has set up a sustainable finance team as focus on environmental, social and governance issues grows.

Factories of Volkswagen (VOW3.DE) in Brazil will remain closed at least through the end of April. Brazil is the biggest car producer in South America.

Shares of Deutsche Bank (DBK.DE) are making a drop below the swing level at €5.70 today. Should the stock make a clear break below recent lows (orange circle), the way towards the support zone at €5.40 would be left open. Following steep declines in February-March, the stock got locked into a €5.40-6.35 trading range. Source: xStation5