DE30 ignores slump in German exports and trades higher

• Equities gain ahead of key jobs data

• DE30 tests 10,900 pts in spite of slump in German exports

• Siemens (SIE.DE) reported 18% in Q1 operating profit

Markets have grown complacent over reports that top trade officials from China and the United States held a good call. European equities are trading higher along with US futures. The big market event today is the release of the US jobs report for April (1:30 pm BST). A loss of 22 million jobs is expected. Apart from that, Moody's agency will review the Italian rating in the evening. No change is expected but keep in mind that rating is currently just a notch above junk. A downgrade, however, could have an impact on sentiment.

In other news, German trade data for March was released at 7:00 am BST today. Exports dropped 11.8% MoM (exp. -5% MoM) while imports declined 5.1% MoM (exp. -4% MoM). In turn, trade balance showed a surplus of just €12.2 billion instead of €18.8 billion. Note that this was the biggest drop in exports on the record! As an export-driven economy this is a big hit to Germany and following months may not be better at all.

Source: xStation5

Just as DE30 finally managed to overcome resistance at 10,750 pts, the index faced another tough hurdle. Overnight rally was halted by 50% retracement of February-March drop that can be found at 10,900 pts. Brief correction after such strong gains is nothing unusual therefore there are not any reasons for bulls to worry just yet. However, in case the drop deepens and price breaks below 10,750 pts (key near-term support for now), things may turn ugly. Keep in mind that today's jobs data from the United States can be a catalyst for a big move as reading is expected to be catastrophic. Staying above 10,750 pts till the end of the day can be considered bullish. Breaking below 10,750 pts would pave the way for the drop towards 10,500 pts - the lower limit of the Overbalance structure and final support.

DAX members at 9:41 am BST. Source: Bloomberg

Siemens (SIE.DE) reported Q1 earnings today. Revenue at €14.25 billion was flat year-over-year while orders dropped 8% to €15.15 billion. Operating profit from industrial business dropped 18% YoY to €1.59 billion. Renewable energy unit that is expected to be spinned-off next year had €317 million loss in Q1 2020 (€205 million profit in Q1 2019). The German company said that it expects more struggles ahead with business bottoming out in the third quarter of a year. Siemens dropped its previous revenue guidance for 2020 and said that instead of moderate growth, it expects a moderate decline now.

Rheinmetall (RHM.DE) reported Q1 operating EBIT of €34 million, down from €54 million in Q1 2019. The company said that its automotive unit had an operating loss of €39 million. Overall operating margin dropped to 2.5% from 4% a year ago. Sales increased from €1.34 billion to €1.36 billion, showing almost no growth at all. Order backlog increased 13% to €10.3 billion. The German industrial company said it cannot provide guidance for 2020.

Lufthansa (LHA.DE) officially confirmed that it is in talks with the German government over the stabilization package.

Rheinmetall (RHM.DE) opened higher today but reversed slightly below 38.2% retracement of this year's slump. The stock pulled back below the price zone at €64.50 that served as the upper limit of the consolidation range. We are observing an attempt to break back above. In case of a failure, two levels to watch are 23.6% retracement (€58.70) and zone at €56.50. Source: xStation5