DE30 finds support at 50% retracement

• European stock markets trade lower

• DE30 halts decline near 15,500 pts area

• Merck boosts mid-term outlook

European stock markets are trading lower on Thursday but the scale of drop is much smaller than it was yesterday. Following a quick drop and similarly quick recovery at the start of today's cash trading, indices started to trade sideways reflecting uncertainty ahead of the upcoming ECB decision (12:45 pm BST). Traders should beware of potential volatility spikes near the announcement time as well as after 1:30 pm BST when ECB President Lagarde holds a press conference.

Source: xStation5

DE30 took another steep dive at the start of today's session. Index reached a daily low near 15,450 pts area - the lowest level since late-July 2021. However, DE30 has managed to subsequently recover above the price zone ranging between 15,500 pts and 50% retracement of the upward move launched in mid-July (15,525 pts). This is a positive sign for bulls and may hint that the recent plunge was a false break below the trading range, just as it was the case in mid-July, when DE30 also dropped below its then trading range. Nevertheless, traders should stay on guard. ECB meeting is scheduled for today (12:45 pm BST - decision, 1:30 pm BST - conference) and it is a major risk event for European stocks. In case ECB decides to announce tapering of asset purchases or provides a detailed timeline for such a move, equities may feel the pain. In case downward move is resumed and index drops below the 15,500 pts mark, the next major support to watch can be found 250 points lower at the lower limit of the Overbalance structure (15,250 pts).

Company News

Merck (MRK.DE) announced that it expects medium-term organic sales growth of 7-10% per year in its life sciences unit, up from a previous forecast of 6-9%. Organic sales in the healthcare unit are expected to grow in "mid single-digit percentage range" while electronic business is expected to generate organic sales growth of 3-6% (3-4% previously). On a group level, Merck expects organic sales growth above 6% per year with 2025 sales expected to reach €25 billion. Investments are expected to be 50% higher in 2021-2025 period compared to 2016-2020 period.

Analysts' actions

• Henkel (HEN3.DE) was downgraded to "neutral" at Goldman Sachs. Price target was set at €84

• Beiersdorf (BEI.DE) was upgraded to "buy" at Goldman Sachs. Price target set at €122

Beiersdorf (BEI.DE) launched today's trading with a bullish gap following an upgrade at Goldman Sachs. Stock continued to move higher in the first hours of the session and is closing in on the resistance zone ranging below €107.50. Note that this area is marked with post-pandemic highs and has been tested numerous times in pre-pandemic times. Source: xStation5