DE30: European stocks extend gains

• European stock markets trade higher
• DE30 bounced off local resistance
• Henkel (HEN3.DE) plans to create new “Consumer Brands” business unit

European indices launched today's session higher, extending yesterday's gains  helped by robust results from energy giant BP which reported a massive upswing in full-year net profit. Company recorded profit of $12.8 billion in 2021, the highest in eight years, as natural gas and oil prices soared. Meanwhile Softbank announced its $66 billion deal to sell British chip designer Arm to Nvidia had fallen through amid regulatory hurdles. Also recent comments from ECB president Lagarde supported market sentiment. Head of the ECB believes that there is no need for big monetary policy tightening in the Eurozone as inflation is set to fall back and could stabilize around 2%. Money markets are still pricing in around 50 basis points of rate hikes in 20222 though economists are more cautious, with most predicting the first move either at the end of the year or early 2023.

DE30 rose sharply at the beginning of the session, however buyers failed to uphold momentum and index bounced off the local resistance at 15330 pts which is marked with previous price reactions. The nearest support to watch lies at 15148 pts and coincides with 23.6% Fibonacci retracement of the upward wave launched at end of October 2020. Source: xStation5

Company news:

Henkel (HEN3.DE) is planning to merge its business units Laundry & Home Care and Beauty Care into one business unit: Henkel Consumer Brands. The company will launch the integration process immediately and expect that new unit will begin operations at the beginning of 2023.

Henkel (HEN3.DE) stock price took a hit in recent weeks, however buyers managed to halt declines at €70.48 which coincides with 78.6% Fibonacci retracement of the upward wave launched in March 2020. Currently price is testing 50 SMA (green line). Should break higher occur, upward move may acclerete towards resistance at €76.50 marked with 61.8% retracement. Source: xStation5

BASF (BAS.DE) is in dispute with the investment company LetterOne Holdings regarding their oil and gas joint venture, Wintershall Dea. BASF wants to divest its 73% stake in the firm with an initial public offering (IPO) of stock. LetterOne argues that this is not the best moment for such a move. Wintershall Dea was established in 2019 through the merger of BASF’s Wintershall unit and LetterOne’s DEA business. The firm produces more than 600,000 barrels of hydrocarbons per day and posted sales of $4.4 billion in 2020. Wintershall Dea operates mostly in northern Europe and Russia. 

RWE AG (RWE.DE) - Jefferies analyst Ahmed Farman has maintained his recommendation on the stock with a Buy rating. The target price is unchanged and still at  €45.00.