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European markets trade lower
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DE30 once again bounced off 14,600 pts support
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Moody's affirmed Continental's rating at Baa2
European stock markets are trading lower on Tuesday. New variants of the coronavirus are spreading fast and it has led to some risk-off moods on the markets, especially in Europe. There is even a chatter that the Old Continent may be set for another lost spring and summer with no travel and entertainment.
German Chancellor Angela Merkel and regional leaders decided to impose a hard lockdown in Germany over the Easter period. Shops will be closed during the first 5 days of April (food stores will open on April 3), gatherings will be limited to a single household and no more than 5 people while public meetings will be banned. General lockdown restrictions were decided to be extended until April 18.
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DE30 tried to break abovev 14,670 pts resistance zone yesterday but has failed. The index pulled back later on and broke below the upward trendline. Decline was halted at the 14,600 pts support zone, that also marks the lower limit of recent trading range. An upward move towards the upper limit of the range at 14,670 pts looks to be the base case scenario for now. Source: xStation5
Company News
Volkswagen preference shares (VOW3.DE) are trading over 4% lower today while common shares (VOW1.DE) drop 6%. Recent outperformance of common stock, which has a very thin liquidity, has attracted a lot of short sellers. Short interest as percent of free float for common shares jumped over 3 percentage points to around 13%. This shows that investors are increasingly worried whether outperformance of one class of stock over the other will last. On the other hand, pick-up in short interest may encourage short squeeze attempts.
Moody's affirmed Continental's (CON.DE) rating at Baa2. Outlook was left unchanged at negative. Rating agency said that expected recovery in the automotive market this and the next year will support a rebound in the company's sales and earnings.
Porsche (PAH3.DE) reported a 41% YoY decline in 2020 net income, to €2.6 billion. Company proposed a €2.204 dividend per common share and €2.21 dividend per preferred share. Porsche expects 2021 net income of €2.6-4.1 billion.
Porsche (PAH3.DE) has rallied over 50% so far this year and tested 6-year highs at €94.55 earlier this week. However, bulls failed to hold onto these gains and share price plunged today on the back of lackluster 2021 guidance. Stock is trading 7% lower today. Source: xStation5
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