DE40 bounces off the 18,375 pts support, Porsche jump 4%

• European indices trade higher
• DE40 bounces off the 18,375 pts support zone
• Porsche gains after call with analysts

European stock market indices trade higher on Wednesday, in spite of a mixed trading during the Asia-Pacific session earlier today. German DAX gains 0.5%, UK FTSE 100 and French CAC40 add 0.4% while Dutch AEX trades 0.3% higher. Economic calendar for the European morning today is empty, but markets may get more volatile in the afternoon, when Fed Chair Powell appears in Congress for the second day of semi-annual testimonies (3:00 pm BST). However, as text of testimony will remain unchanged compared to yesterday, surprises may come only from the Q&A session.

Source: xStation5

German DAX is trading higher today, extending rebound off a recent double bottom painted in the 18,375 pts area. Taking a look at DE40 chart at H1 interval, we can see that the aforementioned 18,375 pts area is marked with a number of important technical supports. Apart from previous price reactions, one can also find an upward trendline, 50% retracement and the lower limit of the local market geometry there. Note that 14-period RSI indicator dropped below 30 points mark, often associated with local lows (orange circles), and is rebounding from there. All of these combined make technical outlook favourable for bulls. Should the current recovery move continue, the first near-term resistance zone can be found in the 18,500 pts area, where 200-period moving average and 38.2% retracement can be found. A key resistance zone to watch in the near-term is 18,800 pts area, marked with recent highs.

Company News

Volkswagen (VOW1.DE) is trading lower today after cutting margin forecast for this year. Company now expects operating margin of 6.50-7.00% this year, down from previous 7.00-7.50% forecast. Move was driven by lower demand for Audi brand cars due to a sharp drop in demand for high-end EVs. Moreover, Volkswagen said that it may also close its Audi factory in Brussels.

Porsche (P911.DE) gains 4% today in response to yesterday's call with analysts, during which company executives showed strong sales to car dealers in Q2 and hinted improvement in business in Q2 compared to Q1.

Yonhap News reports that Baemin delivery app, owned by subsidiary of Delivery Hero (DHER.DE) and holding an around 60% market share in South Korea's food delivery app market, will boost commission fee for restaurants from 6.8 to 9.8% of food prices, starting from August.

Evotec (EVT.DE) is trading over 3% higher today. Company announced that it has entered into a multi-year research and licence agreement with Pfizer. However, analysts note that the deal will not have a big financial impact, although it contributes to positive sentiment around the company.

Analysts' actions

• Lufthansa (LHA.DE) downgraded to 'underweight' at Morgan Stanley. Price target set at €6.50
• Hugo Boss (BOSS.DE) downgraded to 'equal-weight' at Morgan Stanley. Price target set at €45.00
• Covestro (1COV.DE) downgraded to 'equal-weight' at Barclays. Price target set at €61.00
• Bechtle (BC8.DE) rates 'overweight' at Cantor. Price target set at €51.00
• Sartorius (SRT.DE) rated 'buy' at Nephron Research. Price target set at €294.00

Porsche (P911.DE) rallies 4% today and tests 50-session moving average (green line). Stock trades at the highest level since June 7, 2024. Source: xStation5