DE30: Stocks attempt to recover from morning drop

• Stocks dropped after European cash session launch

• DE30 struggles near 12,600 pts

• Earnings reports from Infineon (IFX.DE) and Bayer (BAYN.DE) 

European stocks are trading mixed today. A strong downward move occurred shortly after the start of the European cash session but most major indices from the Western Europe managed to climb back above yesterday's cash close. German DAX and Dutch AEX are laggards that still trade negative on the day.

Source: xStation5

DE30 bounced off the 200-session moving average recently and started to recover from recent declines. However, an upward move is being put to the test today with clear risk-off moods being spotted at the start of the European cash session.Yesterday's jump could have been a brief pause in a correction and we may see the market resume decline today. In such a scenario the aforementioned moving average will be the first support to watch (purple line, 12,200 pts area). Should we see price breaking below this hurdle, the attention will shift to the lower limit of the Overbalance structure at 11,950 pts. 12,950 pts handle is a near-term resistance that can be found slightly below post-pandemic highs.

DAX members at 10:03 am BST. Source: Bloomberg

Bayer (BAYN.DE) reported revenue of €10.05 billion, or 2.5% YoY decline, in Q2 sales. Net loss stood at €9.54 billion but it was to a huge extent driven by one-off litigation costs. EBIT loss was €10.78 billion against €785 million profit a year ago. Massive loss was caused by a settlement in the Roundup weedkiller lawsuit. Bayer agreed in June to pay over $10 billion to settle claims. However, core EPS that excludes one-off effects rose in Q2 2020 by 5.4% to €1.59.

Infineon (IFX.DE) reported a loss for the fiscal Q3 (calendar Q2). The German company reported a loss of €128 million, against a profit of €224 million a year ago. Revenue increased 7.4% YoY, to €2.17 billion. Company said that the coronavirus pandemic caused a big drop in demand for its products and that its impact on the business continues. Nevertheless, Infineon confirmed full-year revenue guidance at €8.5 billion.

Fraport (FRA.DE), operator of airports, said that traffic dropped at every airport operated by the Group. Revenue in the first half of 2020 dropped by almost a half, to €910 million while net loss stood at €231.4 million. Traffic at Frankfurt Airport, the biggest in the company's portfolio, declined by almost 64% to 12.2 million passengers. Moreover, Fraport does not expect traffic to pick-up in the second half of the year and expects a full-year net loss. Keep in mind that Fraport reported half-year revenue figures so relatively calm Q1 2020 was also included. To provide a context, let us mention that Heathrow Airport reported a 96% drop in Q2 traffic last week.

Share price of Bayer (BAYN.DE) has pulled back to the support zone ranging around 61.8% retracement of post-pandemic recovery rally. Reaction to this level will be crucial as this is the last major zone blocking the way towards YTD lows. On the other hand, bouncing higher from this area could hint at head and shoulders pattern building up with neckline at 61.8% retracement. In such a scenario, 38.2% retracement will be a level to watch (level of potential left shoulder). Source: xStation5