DE30 tests resistance zone at 15,150 pts

• European markets trade mixed

• DE30 tests neckline of double bottom pattern

• Merck, Bayern, Allianz and Deutsche Telekom reported Q1 earnings

Stocks in Europe are trading mixed. While European index futures dropped overnight along with Asian equities, situation started to improve as the European cash session launch approached. Majority of the blue chips indices from the Western Europe trade near yesterday's closing prices. UK FTSE 100 (UK100) outperforms and gains 0.5% while Polish WIG20 (W20) lags and drops 0.6%.

Source: xStation5

DE30 painted a double bottom at around 15,000 pts. A strong recovery move followed and the index even managed to break above the neckline of the pattern at 50% retracement of upward move launched May 4 (15,150 pts area). However, bulls failed to hold onto these gains and DE30 pulled back below.  In case the index recovers and pushes back above the 15,150 pts area, continuation of the upward move may be on the cards. Target of the double bottom pattern can be found at 23.6% retracement (15,322.2 pts). However, 15,228 pts zone may act as a resistance on the way there as it is marked with 38.2% retracement, previous price reactions as well as 50- and 100-hour moving averages. 

Company News

Merck (MRK.DE) reported Q1 net sales at €4.63 billion, up 6% YoY and slightly higher than €4.56 billion expected. Adjusted EBITDA reached €1.51 billion (exp. 1.30 billion) while adjusted EPS increased from €1.50 in Q1 2020 to €2.18 in Q1 2021 (exp. €1.73). Net income increased 63% YoY, to €748 million. Company still expects full-year sales of €18.5-19.5 billion and adjusted EPS of €7.50-8.20.

Allianz (ALV.DE) reported a 2.8% YoY drop in Q1 sales, to €41.4 billion. Operating profit increased 45% YoY to €3.34 billion (exp. €3.08 billion) while net income was 83% YoY higher at €2.57 billion (exp. €2.04 billion). Profit beat was driven by the insurance business. German company still expects full-year operating profit to reach €11-13 billion.

Deutsche Telekom (DTE.DE) expects full-year adjusted EBITDA after leases above €37 billion. Decision to boost forecast came after the company reported solid Q1 results. Revenue during January-March 2021 period increased 32% YoY to €26.4 billion (exp. €25.3 billion) while adjusted EBITDA after leases was 41% YoY higher at €9.25 billion (exp. €8.75 billion). Adjusted net income dropped 6.5% YoY to €1.20 billion.

Bayer (BAYN.DE) reported adjusted Q1 EBITDA of €4.12 billion (exp. €3.88 billion). Q1 revenue reached €12.33 billion (exp. €12.03 billion) while core EPS was reported at €2.59. The Crop Science unit was the biggest driver of earnings.

Bayer (BAYN.DE) has been trading in an ascending triangle pattern recently. Thanks to the solid Q1 earnings release, stock jumped today and is testing the upper limit of the pattern. Should we see a break above the resistance in the €55.50 area, stock may move higher towards the potential target of a breakout from the pattern in the €64.00 area. Source: xStation5