DE30: Indices push higher as investors look past inflation concerns

• European markets trade slightly higher

• DE30 attempts to break back above 15,249 pts

• Covestro and SAP released preliminary Q1 earnings

European stock markets are trading slightly higher on Wednesday. Bigger-than-expected pick-up in US inflation did not trigger panic on the markets as Fed members were quick to repeat that pick-ups are expected and transitory. Polish and Russian equities are today's top performers in Europe. Italian, Swedish, Austrian and German equities are laggards trading close to their yesterday's closing prices.

Source: xStation5

DE30 jumped above yesterday's high ahead of a start of today's cash trading. However, the index has been unable to stay above the 78.6% retracement at 15,300 pts for long and has subsequently pulled back below. Price was pushed down to the 38.2% retracement of a recent correction (15,228 pts area) where declines were halted. A short-term upward trendline can be found in the area as well. DE30 started the recovery move and is now testing the price zone at 50% retracement (15,249 pts). Should the upward move continue, near-term resistance levels can be found at 15,270 pts (61.8% retracement) and the aforementioned 15,300 pts area.

Company News

Covestro (1COV.DE) reported preliminary results for Q1 2021. The company said that its EBIT in the quarter will be around €743 million, compared to the market forecast of €566.1 million. Company said that it expects Q2 2021 EBITDA in €730-870 million range. For the full-2021 Covestro sees EBITDA of €2.2-2.7 billion, up from previous forecast of €1.7-2.2 billion. Full-year free operating cash flow is seen at €1.3-1.8 billion, up from previous forecast of €0.9-1.4 billion. Covestro will publish full Q1 2021 earnings on April 28, 2021.

SAP (SAP.DE) also released preliminary Q1 2021 results today. German software company said that its Cloud Revenue jumped 7%. Software Licenses revenue was 7% higher as well, marking the fastest growth in 5 years. Adjusted operating profit was 17% YoY higher. EPS was 29% YoY higher. SAP raised its full-year forecast for Cloud revenue from €9.1-9.5 billion to €9.2-9.5 billion.

Analysts' actions

• Infineon (IFX.DE) rated "buy" at Bank of America. Price target set at €45

• Merck (MRK.DE) downgraded to "reduce" at HSBC. Price target set at €128

SAP (SAP.DE) is one of the best performing DAX members today. Company opened with a big bullish price gap following the release of preliminary Q1 2021 results. Share price is testing the resistance zone at €116.50, marked with 50% retracement of a recent drop and 200-session moving average (purple line). Breaking above it may hint at continuation of an upward move towards €124.50. Source: xStation5