DE30 deepens sell-off and hits 3-week low

• Sell-off on stock markets continue

• DE30 breaks below 10,500 pts

• RWE (RWE.DE) reported 27% YoY increase in Q1 Ebit

Stocks in Europe continue to move lower as investors are having second thoughts on the recovery rally. Concerns over the second wave of infections and state of China-US relations play a role. Stocks from Portugal are taking the biggest hit while Russian equities are the most resilient. All 19 sector subindices from the Euro Stoxx 600 index trade lower with carmakers being top laggards.

Source: xStation5

DE30 may be gearing for a bigger downward move. The index broke below the lower limit of the Overbalance structure and is making the biggest correction move since the market bottomed-out in mid-March. As the lower limit was located more or less on a psychological 10,500 pts handle, significance of this breakout is rising. The index is currently testing low from May 4 and has briefly hit a 3-week low. What levels to focus on next? Big support can be found at 38.2% retracement of the February-March drop (10,250 pts area) - it has served as the lower limit of the trading range between April 7 and April 28. Quest for bulls is to break back above 10,500 pts. Elevated volatility may accompany US jobless claims data release at 1:30 pm BST.

DAX members at 10:24 am BST. Source: Bloomberg

RWE and Deutsche Telekom are among German companies that released Q1 2020 earnings today.

RWE (RWE.DE), the German utility company, had €955 million in adjusted EBIT, an increase of 27% YoY. Net debt increased from €1.7 billion at end-2019 to €8.7 billion at end-Q1 2020. Debt was drawn to ensure liquidity. Company decided to maintain 2020 guidance and still expects adjusted EBITDA of €2.7 to €3 billion. Company plans to invest €5 billion by 2022 to boost its capacity.

Deutsche Telekom (DTE.DE) generated €19.9 billion in sales, an increase of 2.3% YoY. EBITDA after leases came in at €6.54 billion, an increase of 10.2% YoY. Adjusted net income increased 8.5% YoY, to €1.28 billion. On the other hand, the company saw 17.3% YoY decline The company said that negative impact from store closure due to Covid-19 pandemic is likely to be limited as increase in demand for phone services is offsetting it.

BMW (BMW.DE) announced that it has experienced 41% YoY decline in vehicle sales in April. The biggest decline was spotted on the European market. Meanwhile, sales in China increased 14% YoY.

BMW (BMW.DE) made a break below the €48.25 support zone today. The stock is being pressured by risk-off moods as well as a report on strong decline in European sales in April. However, price remains close to the aforementioned price zone therefore one cannot rule out an attempt to break back above. In case it fails, attention will shift to support at €44.50. Source: xStation5