DE30 resumes drop and tests 13,500 pts area

• European stock market indices plunge

• DE30 tests 13,500 pts area

• Earnings from Merck, HeidelbergCement and Siemens

European stock market indices are trading lower on Thursday, following a downbeat trading on Wall Street yesterday and in Asia today. Higher-than-expected US CPI reading yesterday dented market moods and reignited fears that central banks may become even more hawkish in an attempt to tame inflation. Majority of blue chips indices from Western Europe trade over 2% lower. Polish WIG20 (W20) is European top laggard, dropping 3.5% today.

Source: xStation5

Recovery run on the DE30 market was halted slightly below the 13,900 pts resistance zone yesterday. Index failed to break above the 50-period moving average on the H4 interval (green line) and started to erase recent gains. A break back below the 13,600 pts price zone was made today and a return towards lows from the beginning of this week in the 13,330 pts area cannot be ruled out. Traders should keep in mind that the index is trading in a downward channel and the trend is bearish. As such, taking short positions is a risky play and bears seem to be in advantage now, at least from a technical point of view.

Company News

Merck (MRK.DE) reported a 12% YoY jump in Q1 net sales, to €5.20 billion (exp. €5.19 billion). Life Science unit was the biggest contributor with a 29% YoY jump and €2.45 billion in sales. Adjusted EBITDA increased 7.8% YoY to €1.63 billion (exp. €1.63 billion). EBIT increased 12% YoY to €1.17 billion (exp. €1.15 billion). Net income was 18% YoY higher at €884 million. Company issued a more detailed full-year guidance and now expects organic sales growth of 6 to 9% and full-year adjusted EBITDA at €6.6-7.1 billion.

HeidelbergCement (HEI.DE) reported €4.43 billion in Q1 revenue (exp. €4.29 billion). Sales were higher than expected on all major markets with African-Eastern Mediterranean Basin revenue beating expectations the most. Operating EBITDA came in at €394 million (exp. €390.5 million). Company missed earnings expectations in North America, Western & Southern Europe as well as Asia-Pacific regions. 

Siemens (SIE.DE) reported results for fiscal Q2 2022 (calendar Q1 2022). Company reported sales at €17.04 billion (exp. €16.72 billion) and EPS at €1.50 (exp. €2.07). Industrial business profit came in at €1.78 billion, much lower than €2.37 billion expected. Company said that it will fully wind-down its business in Russia and booked a €0.6 billion charge in fiscal-Q2 related to the decision. Company maintained a full-year outlook and expects sales to grow 6-8% this year.

Merck (MRK.DE) is trading lower following the release of its Q1 earnings report. Stock is retesting a local low from early-March in the €160.00 area. Should bulls defend the area, a double bottom pattern may surface on the chart. Should this pattern be executed in a textbook manner, share price may return towards end-2021 levels. However, a break above the neckline at €195 would be needed for confirmation. Source: xStation5