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European stock markets trade slightly higher
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DE30 trades at fresh all-time highs
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Continental drops after lacklustre 2021 guidance
European stock markets are trading a touch higher on Tuesday. Energy companies, utilities and travel stocks are among European top performers today while miners, banks and automotive stocks lag.
German trade data for January was released at 7:00 am GMT today. Imports dropped 4.7% MoM while the market expected a drop of just 0.5% MoM. However, exports data turned out to be the biggest surprise. While market consensus pointed to a 1.2% MoM decline, actual data showed 1.4% MoM increase.
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Source: xStation5
DE30 rallied yesterday afternoon and reached a fresh all-time high above 14,400 pts. The upward move is being continued today with the German index reaching the upper limit of the mid-term rising wedge pattern. History shows that wedge patterns more often result in a reversal breakout so in this case it would be a bearish break below the lower limit of the pattern (13,700 pts area at the moment). While the upward move has slowed today and there are fundamental reasons that could favour correction, traders should keep in mind that investors' in general are very bullish. While this can be seen as a contrarian signal that would also support the correction thesis, trying to time the top can be extremely risky and it is better to wait for a reversal candlestick pattern (like for example pin bar or evening star).
DAX members at 10:18 am GMT. Source: Bloomberg
Company News
Continental (CON.DE) reported preliminary full-2020 results. The company saw a full-year net loss of €961.9 million (€1.23 billion in 2019) while 2020 sales dropped 15% to €37.72 billion (exp. €37.6 billion). Adjusted EBIT margin turned out to be 3.5%. Results were more or less in line with expectations but the stock is trading lower today amid lacklustre guidance for 2021. Continental expects sales of €40.5-42.5 billion and adjusted EBIT margin of 5-6%. On top of that, the company also said that it will propose not to pay a dividend for 2020.
Deutsche Post (DPW.DE) reported Ebit of €4.85 billion for full-2020, an increase of €18% YoY (exp. €4.78 billion). Sales increased 5.5% YoY to €66.8 billion while net income jumped 14% YoY to €2.98 billion. This resulted in an EPS of €2.41, up from €2.13 in 2019. Company expects 2021 EBIT to exceed €5.6 billion (in-line with expectations).
Volkswagen (VOW1.DE) plans to pay out another €1,000 bonus to its workers in May after an almost €1,700 bonus was paid out in November. Payout is aimed at easing workers' discomfort resulting from the coronavirus pandemic.
Continental (CON.DE) jumped above the upper limit of an ascending triangle pattern at €125.00. However, it turned out to be a false breakout as the stock slumped today on a back of a lacklustre 2021 guidance. So far, sell-off has been halted at the 50-session moving average (green line) in the €120 area. Should we see a bounce from there, the aforementioned €125 resistance will be a level to watch. Source: xStation5
