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DE30 once again tests 13,200 pts

11:40 AM 11 November 2020

  • European markets trade slightly higher

  • DE30 makes another attempt of breaking above 13,200 pts

  • Continental (CON.DE) warns of big restructuring costs in Q4 2020

European stocks are trading slightly higher on Wednesday. Trading is likely to be a bit muted in the afternoon as the United States celebrates Veteran's Day and bond markets will be closed. Wall Street session will be held as usual. There are no key macro releases scheduled for today but a number of ECB bankers will deliver speeches in the afternoon, including President Lagarde at 1:00 pm GMT.

Value stocks have a bigger share in the German index than in the US indices and therefore DE30 continues to outperform US peers amid tech to value rotation. DE30 has approached an important resistance zone ranging above 13,200 pts today. Note that the index has already failed to break above it twice this week. In theory, the chance of breaking higher increases with each subsequent test. Should we see a break, bulls' attention will shift to post-pandemic high in the 13,450 pts area. Source: xStation5

Company News

E.ON (EOAN.DE) said that adjusted EBIT dropped by around €300 million in the first nine months of 2020, to €2.7 billion. Net income in the period was 15% YoY lower at €1.1 billion. German utilities company backed 2020 guidance as it still expected full-year adjusted EBIT in the €3.6-3.8 billion range. Net income is expected to fall in the €1.5-1.7 billion range. Company maintained dividend guidance as well. E.ON said that new lockdowns will not have a material impact on its business.

Continental (CON.DE) said that it expects revenue to come in at €37.5 billion in full-2020 while adjusted EBIT margin should narrow to €3%. Sales in 2019 stood at €44.48 billion while EBIT margin was at 7.4% in the previous year. Company said that additional restructuring costs will be booked in the final quarter of the year and they will affect EBIT and net profit significantly. However, Continental did not provide any hints on the size of those restructuring costs.

Analyst actions

  • Lufthansa (LHA.DE) upgraded to "neutral" at Goldman Sachs. Price target set at €9.40

  • Infineon (IFX.DE) downgraded to "hold" at Nord/LB. Price target set at €26.50

  • SAP (SAP.DE) upgraded to :buy" at Baader Helvea. Price target set at €123

DAX members at 10:21 am GMT. Source: Bloomberg

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