DE30: DAX erases morning rally and tests yesterday's low

• Attention focused on BP and HSBC quarterly results

• Shop Apotheke surprises with better results

Tuesday's session on European markets brings mixed investor sentiment. Stock indices are subject to moderate declines, but individual companies are nevertheless struggling to stay above the dash.  The German DAX (DE30) surged upwards shortly after the start of the session and set new yearly highs. However, the 'fuel' did not last long and a few minutes after the start there was a realization of profits, as a result of which the DE30 is trading below the bar. 

At 10:00 am BST, data on HICP inflation from the euro area were released. The headline reading was in line with expectations at 7% y/y (previously 6.9%), while the core reading slowed slightly to 5.6% y/y from 5.7% y/y on expectations of a sustained 5.7% y/y. 

Inflation in the euro area therefore remains high and significantly above the ECB's target. This puts the European Central Bank in a difficult position with regard to the tightening cycle. In addition, today's PMI data showed that most EU economies are now in a downward phase (PMIs below 50).

Investors will also learn about US durable goods orders data today (3pm bst)

The mood in Europe during Tuesday's trading session is relatively mixed. Source: xStation 5

News:

Investors' attention during today's trading session is primarily focused on the results of two UK giants, namely BP (BP.UK) and HSBC (HSBA.UK). The quarterly reports of these companies came out quite differently, adding to the volatility in sentiment during today's session on the Old Continent. Here are the details of both reports:

BP 

• BP's shares are losing ground due to unmet cash flow expectations and slower share buybacks

• Cash flow dynamics are likely to weaken with oil prices falling in recent months.

• Nevertheless, earnings per share managed to significantly beat analyst consensus, which somewhat offsets the negative sentiment towards the slow buyback

• BP said it would repurchase US$1.75bn worth of shares, down from US$1bn in the previous period.

The company's detailed results. Source: Bloomberg

HSBC

• The case is quite the opposite for HSBC, here it is the buyback program that is driving the bank's share price soaring today.

• The bank's quarterly results exceeded analysts' expectations.

• Investors were particularly pleased by lower costs and lower reserves

• HSBC announces $2bn share buyback after strong profit growth

•  HSBC CEO says acquired SVB UK will form core of new global technology unit

• Analysts were also pleased to see better net interest income, however, net interest margin momentum "appears to be weakening" - JP Morgan analysts added.

The bank's detailed results. Source: Bloomberg

In Germany itself, attention is focused on the results of Shop Apotheke (SAE.DE), which surprised investors positively. Analysts' attention was mainly captured by the strong increase in adjusted EBITDA and the free cash flow reading. Morgan Stanley analysts comment that such a strong EBITDA performance is mainly due to improved operating leverage in the German, Swiss and Austrian markets. 

Source: Bloomberg

Major percentage changes and information from individual companies in the DAX index. Source: Bloomberg

DE30 chart

Futures based on the German DAX index (DE30) are trading down today and trying to break below yesterday's opening levels. Source: xStation 5