DE30 tests 15,500 resistance again, Lufthansa jumps 5% on upbeat guidance

• European stock market indices trade up to 1% higher

• DE30 makes another attempt at breaking above 15,500 pts zone

• Lufthansa jumps 5% after upbeat 2023 guidance

European stock markets indices are trading higher today, following upbeat US session yesterday and positive moods seen during the Asian trading session. Economic calendar for European trading is light and did not include any top-tier releases. Revisions of services PMI data for February should small deviations from flash reading. PPI data showed a large downside surprise but data was largely overlooked by the markets.

PPI inflation data from the European Monetary Union (euro zone) was released today at 10:00 am GMT. Report showed quite a big slowdown with headline PPI dropping from 24.5% YoY in December (revised lower from 24.6% YoY) to 15.0% YoY in February. Market expected a slowdown to 17.8% YoY. On a month-over-month basis, PPI came in at -2.8% MoM while the market expected a -0.4% MoM reading. However, such a big drop in monthly reading was driven entirely by energy prices, which dropped 9.4% MoM. Should we exclude those from the reading, European PPI would see a monthly increase of 1.1% MoM in January. While deviation from expectations was quite large, the reading failed to trigger any major reaction on EUR or equity markets as this was data for January and it was somewhat outdated given that traders were served CPI data for February earlier this week.

German DAX is trading almost 1% higher today as indices from all across the Old Continent caught a bid. Taking a look at the DAX futures chart at H1 interval (DE30), we can see that the index broke above the upper limit of the short-term downward channel this morning and tested a resistance zone ranging below the 15,500 pts mark. Bulls failed during the first attempt to break above but remain close to the zone so another attempt cannot be ruled out in the later part of the day. Source: xStation5

Lufthansa (LHA.DE) gains following the release of the Q4 2022 earnings report. The German airline generated revenue of €8.88 billion in Q4 2022 (exp. €9.02 billion) with adjusted EBIT reaching €575 million (exp. €556.3 million). While results were mixed, guidance offered by Lufthansa is promising. Company expects significant improvement in adjusted EBIT in 2023 as well as recovery of full-year capacity to 85-90% of 2019 levels. Chief Financial Officer of Lufthansa said that the company plans to pay a dividend in 2024 again.

Infineon (IFX.DE) agreed to buy GaN Systems for $830 million in cash. GaN Systems is a Canadian company that develops nitride-based solutions used in power conversions. Infineon said that the acquisition will be funded with existing liquidity.

Analysts' recommendations

• Volkswagen (VOW1.DE) downgraded to "hold" at HSBC. Price target set at €148.00

• Porsche SE (PAH3.DE) downgraded to "hold" at HSBC. Price target set at €51.00

Lufthansa (LHA.DE) rallies over-5% following release of Q4 2022 and upbeat forecasts for 2023. Stock broke above a resistance zone marked with 61.8% retracement of the downward move launched in March 2021 this morning and continues to move higher. The next potential resistance zone to watch can be found ranging below 78.6% retracement in the 11.30. Source: xStation5