DE30: Stocks rally on Covid-19 drug reports

• Stocks jump on "promising results" of Gilead drug

• DE30 jumps above 10,600 pts but rally stalls

• European car sales drop 52% YoY in March

European shares launched Friday's session significantly higher following reports that a drug developed by Gilead Science is showing promising results in coronavirus treatment. However, upward pressure eased as the time passed and indices started to trade sideways. Nevertheless, they still trade significantly above yesterday's closing prices.

German health minister says outbreak is controllable now

Jens Spahn, health minister of Germany, made some interesting comments today. He said that the coronavirus outbreak in Germany can be controlled now as infection rate has dropped to 1. It means that statistically every person infected infects 1 more person. Keeping this rate at or below 1 is crucial not to overwhelm the healthcare system. German government estimates point that infection rate at 1.1 would overwhelm the country's healthcare system by October while a rate of 1.2 would do so by July. This is certainly an improvement and seems to justify plans of easing restrictions. However, citizens have limited contact with each other under lockdown measures and once those restrictions are eased there is a high chance of the second wave effect occurring.

Source: xStation5

DE30 jumped overnight to above 10,500 pts following reports that a drug developed by Gilead Science (GILD.US) is showing promising results in coronavirus treatment. Upward move continued throughout the Asian session and eased following the launch of European cash session. The index has been trading sideways around the 10,600 pts handle. The potential head and shoulders pattern we have mentioned yesterday has been invalidated with a surge significantly above the level of the left shoulder (10,500 pts). Nevertheless, the index still remains within the Overbalance structure and unless we see a break above high from April 14 (10,800 pts area), outlook remains blurry to say the least. Two support levels to watch in case a bigger pullback start can be found at 10,200 and 10,000 pts.

DAX members at 10:14 am BST. Source: Bloomberg

European Automobile Manufacturers Association released data on March sales. Saying that they were poor would be a huge understatement. European sales plunged a record 52% YoY in March! Keep in mind that in the first half of March, life was going on as if nothing had happened. Having said that, April is set to show a much higher decline. Nevertheless, carmakers gain on overall improvement in moods today.

Deutsche Bank (DBK.DE) and Commerzbank (CBK.DE) gain along with other big European banks today. European Central Bank lowered capital requirements and allowed lenders to set aside less capital for market risks. The move is especially beneficial for banks with big trading operations like Deutsche Bank, BNP Paribas or Societe Generale.

Volkswagen (VOW3.DE) withdrew its 2020 outlook saying that it is unable to determine a new outlook after the coronavirus pandemic brought sales and production to halt.

According to a Bloomberg report, Siemens (SIE.DE) is seeking €3 billion in new credit lines from banks to weather the coronavirus crisis. BNP Paribas is said to be among banks the company has approached.

Analyst actions

• BMW (BMW.DE) raised to "buy" at HSBC. Price target set at €62.50

• Wirecard (WDI.DE) cut to "neutral" at Goldman Sachs. Price target set at €130

• Adidas (ADS.DE) cut to "underperform" at Credit Suisse. Price target set at €199

Shares of Deutsche Bank (DBK.DE) bounced off the 200-session moving average *purple line) near the €5.70 area. The stock is trading higher thanks to ECB easing capital requirements. Rally has been halted at the 50-session moving average (green line, €6.00 area) shortly after the opening of the European cash session. Breaking above it would pave the way for a test of the topside resistance of the trading range at €6.35. Source: xStation5