DE30: Bulls attempt to break out of bullish channel

Summary:

• European equities start higher on trade optimism
• DAX struggles around the upper bound of the bullish channel
• SAP (SAP.DE) rallies after encouraging Q3 preliminary earnings

The beginning Friday’s trading is undoubtedly dominated by recent headlines regarding ongoing trade discussion in Washington. Although European equities could thrive today, the same is not so certain when it comes to US indices as a Trump-He meeting may affect them significantly.

Source: xStation5

Focusing on the H4 chart of the German DE30 one may notice that bulls will have deal with their major technical obstacle in the form of the upper bound of the bullish channel. This level also coincides with a level of 12300 points, thereby strengthening the importance of this supply zone. Moreover, today is the last trading day this week which could matter for a weekly candlestick. Should bulls manage to close above the aforementioned resistance, then an upward move could be continued. Either way, it has to be kept in mind that trade talks in the US will be a prime factor for assets all over the globe, thus involving in European equities before the Trump-He meeting could be a risky strategy.

DAX members at 8:26 am BST. Source: Bloomberg

SAP shares are rallying more than 7% this morning after the company showed promising preliminary earnings for the third quarter. SAP’s non-IFRS EPS grew to 1.3 EUR from 1.14 EUR seen at the same period last year. Apart from it, non-IFRS total revenue increased to 6.81 billion EUR from 6.03 billion EUR last year (assuming constant currency), while non-IFRS operating margin picked up to 30.6% from 28.9% last year. These results topped analysts’ expectations, boosting the stock this morning. On top of that, SAP named Jennifer Morgan and Christian Klein as the successors to CEO Bill McDermott, who is stepping down. 

BMW shares are trading slightly higher following the company reported its September sales grew 4.6% YoY (4.8% for BMW only, 2.9% for Mini). 

RWE is gaining traction this morning following yesterday’s call from Barclays suggesting share price weakness is a “major buying opportunity”. The bank remains positive on the stock keeping its price target at 30 EUR (the spot price is 27.3 EUR).