DE30 slides as industrial data continues to disappoint

• German stocks decline as industrial production continues to decline

• DE30 pulls back below support zone at 13540 pts

• Ceconomy (CEC.DE) surges after earnings release

European indices started the day lower as investors got concerned over significant increase in ex-China coronavirus infections, especially in Japan. Japan said that 41 people from the quarantined cruise ship were tested positive for the virus today. Moreover, lacklustre industrial production data puts additional pressure on German stocks. Miners and carmakers are the worst performing sectors in Europe at the beginning of Friday’s trade.

German industry continues to struggle

Today another piece of data from the German industry was released and once again investors were offered a disappointing report. Industrial production dropped 3.5% MoM against an expected drop of 0.2% MoM. Annual drop was 6.8%, marking 14th consecutive month of declines. While declines were broad, manufacturers of capital goods experienced the biggest drop in production. The reading comes a day after the release of data that show factory orders declining at the fastest pace in over a decade.

Source: xStation

DE30 failed to break above the 13600 pts handle yesterday and did not manage to test all-time high. The index has pulled back below the price zone at 13540 pts at the start of today’s session. A point to note is that this price zone also marks the lower limit of the local Overbalance structure. In case buyers fail to bring price back above it, a deeper downward move may be on the cards. In such a scenario, the nearest support zone to watch can be found in the 13365-13385 pts area. On the other hand, a break back above the zone at 13540 pts could see an upward move accelerate towards recent highs.

DAX members at 10:11 am GMT. Source: Bloomberg

Ceconomy (CEC.DE), the German company operating consumer electronic chains, is surging today. The company reported earnings for Q4 2019. While sales fell 0.8% to €6.82 billion, EBIT increased 36% YoY to €319 million. Adjusted EPS increased 48.9% YoY and reached €0.47. Ceconomy decided to confirm forecast for fiscal 2020 (ends on September 30). The company is the strongest stock in SDAX index and gains over 10%.

Hugo Boss (BOSS.DE) drops along with other European fashion companies after London-based Burberry Group said that coronavirus outbreak hits sales in China. CFO of the UK fashion house said that sales in shops that remain open are down 70-80%. 

Daimler (DAI.DE) and other truck makers won a dismissal of €867 million lawsuit. The lawsuit claimed that there was a price-fixing cartel and that consumers were overcharged.

Airbus (AIR.DE) announced that its net orders for January amounted to 274 commercial aircrafts. Gross orders stood at 296 before cancellations were taken into account. The planemaker made 31 deliveries during the month.

Analyst actions

• Covestro (1COV.DE) was raised to “buy” at Citi. Price target set at €46

Ceconomy (CEC.DE) launched today’s trading near the price zone marked by 50% Fibo level of 2019 downward move and previous price reactions. The stock surged at the start of the cash session but gains were quickly erased. Nevertheless, shares are still 8% higher on the day and as long as the stock holds above the aforementioned price zone, further upward move cannot be ruled out. Source: xStation5