DE30: Germany stock market rises, Hapag-Lloyd surges 10% despite weak Q3 results

• European indices gain, DE30 rises 0.6%
• Merck (MRK.DE) and Henkel (HEN3.DE) rally after results
• Hapag Lloyd (HLAG.DE) breaks out of extreme oversold zone despite 77% drop in Q3 net profit

European stock indexes are trading higher today, with investors in Germany particularly active on the shares of pharmaceutical company Merck, which is gaining more than 5% on the back of results that showed higher-than-expected sales of cancer-fighting drugs. DAX (DE30) futures are trading close to 0.6% up - in the middle of the pack against other European benchmarks.

DAX futures once again found a 'low' at 14,800 points and now the bulls are approaching key resistance near the SMA50 (orange line). An important resistance also appears to be 15,500 points where we see the 23.6 Fibonacci retracement of the upward wave from the fall of 2022. Source: xStation5

The most active companies in the German DAX index. Source: Bloomberg Finance LP

News

• Brenntag (BNR.DE) profits below analysts' forecasts, shares gain 1.5%
• Henkel (HEN3.DE) raises full-year EBIT margin forecast - shares up 3%
• Merck (MRK.DE) results above forecasts, cancer drugs enjoy strong demand - giant gains nearly 5.5%
• ArcelorMittal (MT.NL) under pressure as steel demand continues to cool - company shares lose
• Fielmann (FIE.DE) eyewear sales well above forecasts in Q3 - shares gain nearly 8%
• Analysts at Intesa Sanpaolo issued a 'buy' recommendation for Allianz (ALV.DE) with a target price of EUR 260

Hapag-Lloyd (HLAG.DE) below forecasts but shares climb 

German container ship operator and one of the world's largest freight companies, Hapag-Lloyd (HLAG.DE) reported a net profit of €3.2 billion for the first nine months of 2023, down 77% from 2022 when the company posted a net profit of €13.8 billion. Hapag lowered earnings for the full year.profit forecasts for the full year. The post-pandemic boom in freight rates resulting from high demand and disrupted supply chains has given way to fears of recession. Nonetheless, shares are up nearly 10% today on the back of TAU's y/y volume growth and the fact that a fair amount of negative news was already contained in the company's stock price.

• The company indicated that the results are weaker solely due to changing conditions in the markets as the removal of port congestion and slowing consumption hit freight rates.Hapag indicated that it is targeting EBIT of €2.2 to €3.1 billion in 2023, compared to the previously estimated €2 - €4 billion. The markets expected the company's EBITDA to be as high as in the range of €4.1-5 billion versus previously €5-6 billion.According to estimates from FactSet, the markets now expect full-year EBITDA of €5.01 billion and EBIT of €3.03 billion.

• Freight volumes remained at the same level as a year earlier, at 8.9 million TEUs (up 5% y/y in Q3).There was also relief from lower shipping fuel prices, which fell nearly 20% over nine months to an average of $611/ton. Hapah's freight rates fell 45% in nine months, and unless they return to higher levels, the company could face a serious challenge from the next quarters.
• Analysts say that significant oversupply in the shipping industry could continue to keep pressure on rates - even for 2 to 3 years. Deutsche Bank Research pointed out that the lower forecasts are due to a downward trend in freight rates, which have been only slightly offset by higher TEU volumes.

Source: xStation5