DE30 pulls back after record drop in German exports

• German exports with record drop in April

• DE30 tries to hold above 12,600 pts

• Lufthansa (LHA.DE) secured state aid from Austrian government

Stock indices all around the World are pulling back from post-pandemic highs today. Moods deteriorate following release of poor trade data from Germany. There are not any key macro releases scheduled for the later part of the day therefore trading may remain sentiment-driven.

Record drop in German exports

German trade data for April was released today at 7:00 pm BST. Exports data was expected to show a drop of 15.6% MoM but instead it showed a drop of 24% MoM! Imports dropped 16.5% MoM while market expected 16% drop. Trade surplus stood at €3.2 billion. Foreign sales dropped 31.1% on year-over-year terms - the biggest drop since at least 1950 (no earlier data available). Release coincided with the beginning of today's pullback on stock markets therefore it can be seen as a reason.

Source: xStation5

DE30 has been trading sideways during today's Asian trading. However, release of German exports data showed the index' direction. Disappointing release triggered a pullback that made index erase more than 350 pts! Bulls are trying to push the index back above the 78.6% retracement at 12,600 pts. DE30 recovered slightly from session lows but continues to trade at the upper limit of the important price zone (red colour on the chart above). Finishing the day above could encourage buyers to resume a rally. However, should the index break below the zone, things may turn ugly as the drop was triggered by hard data release. In such a scenario, near-term support can be found ranging around 11,875 pts.

DAX members at 10:27 am BST. Source: Bloomberg

Austria approved state aid for Austrian Airlines, a unit of the Deutsche Lufthansa (LHA.DE). Austrian Airlines will receive €150 millions in direct aid and an additional €300 million via loans. Lufthansa agreed to keep Vienna, capital of Austria, as its hub for its operations in Central abd Eastern Europe. Apart from German and Austrian state aid, Lufthansa has already secured over €1 billion in state aid from the Swiss government.

Citigroup said that Wirecard (WDI.DE) is currently its least preferred stock in the payments sector. Bank's analysts advised caution as a number of uncertainties surround the company and share price is driven primarily by newsflow rather than fundamentals. While rating was left unchanged at "neutral", Citigroup withdrew the price target of €105.

Analyst actions

• BASF (BAS.DE) cut to "hold" at HSBC. Price target set at €51

• Deutsche Telekom (DTE.DE) raised to "buy" at Jefferies. Price target set at €17.20

• Deutsche Post (DPW.DE) affirmed at "buy" at Deutsche Bank. Price target raised to €36

Woes and uncertainties surrounding Wirecard (WDI.DE) are limiting recovery potential for share price. Downbeat note from Citigroup's analysts is unlikely to shore up sentiment. Stock is making a slight pullback today after a failed attempt of breaking above €100 mark. Source: xStation5