DE30 recovers after testing 12,800 pts

• European stocks trade higher

• DE30 breaks above resistance at 12,950 pts after recovering from morning dip

• Covestro (1COV.DE) expects solid Q3 2020

Stocks in Europe were trading mixed for the first 2 hours of the cash session. However, most of the indices caught a bid after 10:00 am BST and now gains can be spotted all across the Old Continent. Economic calendar is empty today with US housing market data being the only hard data print scheduled. Apart from that, investors will be served a streak of earnings reports from US retailers, including Walmart.

Source: xStation5

DE30 made a test of the 12,800 pts handle shortly after the beginning of today's European cash session. Bears were unable to break below it and buyers quickly took over. Index recovered and climbed towards the 12,950 pts area, where the upper limit of a current trading range can be found. Bulls failed to break above this hurdle on the first attempt today but the second one was more promising. The index broke above the 12,950 pts with strong upward momentum and is closing in on the 13,000 pts mark at press time. Continuation of the upward move may bring the index towards the next major resistance - price zone ranging between 13,100 pts and 78.6% retracement of late-July correction. 12,800 pts remains key support to watch with lower limit of the Overbalance structure located in the area.

DAX members at 9:53 am BST. Source: Bloomberg

Chief Financial Officer of Covestro (1COV.DE) said in an interview with Reuters that extension of stay-at-home orders into Q3 has caused increased demand for mobile devices or furniture and, in turn, for materials manufactured by Covestro. Executive said that Q3 EBITDA is likely to be around €350 million. Median consensus pointed to a €268 million before the interview was aired.

Rheinmetall (RHM.DE) has reached an agreement with the Hungarian government. Under the deal, Rheinmetall and Hungarian government will set up a joint venture that will produce Lynx armored vehicles in Hungary.

Evotec (EVT.DE) reached an agreement with Novo Nordisk (NOVOB.DK) on chronic kidney disease. The two companies will collaborate to discover and develop new therapeutics for the disease. Evotec will receive an upfront payment (amount undisclosed) and milestone potential of more than €150 million per product. Evotec will also be eligible to receive royalties once products are commercialized.

Covestro (1COV.DE) continues to run higher after breaking above the 200-session moving average (purple line) and a long-term price zone at €37.50. Key resistance to watch can be found at €41.75. Source: xStation5