DE30: Stocks seesaw near last week's close

• European markets trade flat at the start of a new week

• DE30 tries to stay above upward trendline

• SAP (SAP.DE) plans to list subsidiary in the United States

European stocks seesaw amid lack of clear catalyst for bigger move. China-US tensions remain in the spotlight but there were no new developments in the matter over the weekend. Phase 4 US stimulus bill is set to be introduced this afternoon and it could be a mover for stocks.

German IFO institute released business sentiment indices for July at 9:00 am BST.

• Business Climate: 90.5 vs 89.3 expected

• Current Assessment: 84.5 vs 85 expected

• Business Expectations: 97 vs 93.4 expected

Release hints on a strong start to the third quarter with all indices rising compared to the previous month. Current assessment subindex missed expectations slightly. IFO economists reaffirmed its German GDP forecast of 6.9% growth in Q3 2020. DE30 caught a bid following the announcement and moved from daily loss to a daily gain. However, most of this gain has been already erased.

Source: xStation5

DE30 made another test of the support zone ranging around 12,800 pts handle today but has once again failed to break below. The index caught a bid following IFO data release and managed to climb above Friday's close. DE30 is in an interesting technical position as it is not only trading close to key 12,800 pts support but it also trades at the upward trendline. Breaking trendline and the 12,800 pts area could trigger a larger drop towards the lower limit of a large Overbalance structure at 12,650 pts. Clearing this support would hint at a bearish trend reversal. On the other hand, should buyers manage to keep the index afloat today, near-term resistance can be found at 12,930 pts and is marked with 200-hour moving average and previous price reactions.

DAX members at 9:57 am BST. Source: Bloomberg

SAP (SAP.DE) announced that it plans to list its subsidiary, Qualtrics, via Initial Public Offering in the United States. SAP bought the company for $8 billion in 2018. IPO may value Qualtrics in the $10-18 billion range. SAP also released Q2 earnings today:

• EPS: €0.73, or 53% YoY higher

• Operating profit: €1.28 billion, or 55% YoY higher

• Revenue: €6.74 billion, or 2% YoY higher

• Cloud revenue: €2.04 billion, or 21% YoY higher

• Cloud backlog: €6.65 billion (+20%)

The company said that its business continued to improve throughout the second quarter of 2020. Higher profit was ascribed to lower restructuring expenses than in the previous year but revenue and order backlog gains also hint at business performing well amid pandemic. SAP expects full year revenue to be in the €27.8-28.5 billion range and cloud revenue in €8.3-8.7 billion range. Operating profit is seen between €8.1 and €8.7 billion

Shares of airlines and travel companies tumbled today after the United Kingdom decided to order all visitors from Spain to undergo a 14-day quarantine. Spain has re-emerged as a European coronavirus hotspot. Other countries may decide on similar measures, which would be disastrous for the travel companies. TUI (TUI.DE) decided to cancel all holidays in mainland Spain until at least 9 August. Shares of TUI are down over 13% today while Lufthansa (LHA.DE) trades around 7% lower.

SAP (SAP.DE) launched the day with a big bullish price gap. Share price pulled back a bit but still sits above Friday's close. As long as SAP trades above pre-pandemic high at around €130 bulls do not have reasons to worry. The near-term resistance can be found at recent peak near 127.2% exterior retracement of February-March drop (€142.50). Source: xStation5