DE30: DAX struggles to hold on to key support zone

• DAX tests weekly lows

• Attention focused on inflation reports from Germany and the US

• Covestro gains on wave of quarterly results

The last trading session of the month is relatively nervous. Investors cannot find a common direction, which is mainly due to the uncertainty surrounding the CPI (HICP) inflation reports from Germany and PCE from the USA scheduled for today. Let us remember that the most important macro event of the month, the FOMC's interest rate decision, awaits us this Wednesday. This meeting is important as it will most likely indicate whether Wednesday's hike will be the last in the ongoing cycle. Nevertheless, the spectre of recession also remains an important factor, which is being assessed in the market through the prism of the future performance of listed companies.

Germany's Q1 GDP report disappoints

The preliminary German GDP report for Q1 2023 was published at 09:00 am BST today and proved to be a disappointment, with the German economy neither growing nor contracting in the first three months of the year (0.0% k/k). However, the market was expecting growth of 0.2% k/k. Following the publication, DAX futures (DE30) retreated and the EUR lost against the US dollar.

The mood in Europe during Friday's trading session is relatively mixed. Markets cannot find a common direction after a weak start to the week and an attempt to erase some of the losses during yesterday's session. Source: xStation 5

What will the inflation reading from Germany show? 

The analyst consensus is that the inflation reading will show a decline in the growth rate of goods and services prices compared to the previous month as well as last year. Importantly, however, for both the m/m and y/y CPI readings, the standard deviation of analysts' predictions is close to 0.25%, which is large enough to increase the likelihood of a surprise in today's reading. Source: Bloomberg       

News: Covestro gains after results, HelloFresh upgraded by Barclays

Covestro (1COV.DE) gains 5% on the back of strong quarterly results and news of a share buyback. The mood is also supported by a raised full-year outlook. Today's results surprised analysts, who had assumed that the start of 2023 would be challenging for Covestro's business. 

Details of the company's quarterly report. Source: Bloomberg

HelloFresh (HFG.DE) shares are also doing relatively well, gaining on the wave of a raised recommendation from Barclays. The British bank rated the company's shares 'overweight' and raised its target price for the company's shares by 36% to €35 per share.            

Covestro is breaking out above the upper barrier of the consolidation zone and opening a path towards the resistance set by the 23.6% Fibo retracement of the upward impulse initiated in September 2022. Source: xStation 5

Technical analysis of the DE30: Index retreats to weekly lowsDespite a strong rebound during yesterday's session on the Old Continent, today the benchmark of the largest German companies is once again under downward pressure. DE30 futures are currently slipping towards weekly lows, driven mainly by the uncertainty surrounding the German and US PCE inflation readings scheduled for today. Readings lower than expectations could support the demand side, which is trying to defend weekly levels. Source: xStation 5