DE30 struggles after breaking out of downward channel

• European indices trade mixed

• DE30 struggles after breaking out of downward channel

• Draegerwerk drops after preliminary Q1 2022 results

European stock market indices are trading mixed on what is a final trading day of a shortened holiday week (there will be no session on most European stock markets tomorrow). Majority of European blue chip indices trade little changed today. Polish WIG20 (W20) is a top laggard, trading 0.5% lower, while Austrian ATX (AUT20) outperforms, trading 0.8% higher. Two potential volatility events today are - ECB rate decision (12:45 pm BST) and US retail sales report for March (1:30 pm BST).

Source: xStation5

DE30 managed to break above the upper limit of the downward channel. However, bulls were unable to extend the upward move above the 14,200-14,250 pts resistance zone and the index turned lower. The first, near-term support to watch is the 14,050 pts zone that managed to halt declines earlier a few times. Breaking below this zone would also mean a return to the range of the aforementioned downward channel and boost outlook for continuation of the downward move. In such a scenario, 13,800 pts will be the next support zone to watch. On the other hand, should bulls regain control, the two resistance levels to watch in near-term are the aforementioned 14,200-14,250 pts area and 14,350 pts resistance zone.

Company News

Draegerwerk (DRW8.DE) reported preliminary results for Q1 2022 today. Company reported a 19.5% YoY increase in net sales, to €649.5 million, while EBIT is expected to be a negative €45 million. Order intake increased 10.2% YoY to €825.7 million. Company continues to expect a full-year net sales decline of 5-9% and EBIT margin between 1-4% but said that recent geopolitical developments and resulting difficulties with supply of electronic components made it more likely for results to come near the lower end of guidance. Draegerwerk is one of the worst performing German stocks today.

Volkswagen (VOW1.DE) said that according to preliminary quarterly results for Q1 2022, its operating return of sales improved from 7.7% in Q1 2021 to 13.5% in Q1 2022. 

EQXX, a prototype electric vehicle developed by Mercedes-Benz Group (MBG.DE), managed to cover a distance of over 1,000 kilometers on a single battery charge. If employed into a mass-production, the vehicle will become EV with the longest range, much higher than 652 kilometers offered by Tesla's Model S long range variant.

Draegerwerk (DRW8.DE) plunged 8% today after warning that full-year results may be at the lower limit of its guidance range. Taking a look at the weekly chart (W1), we can see that the stock pulled back from the resistance zone marked with the 61.8% retracement of the upward move started in late-2019 and is now testing the support zone marked with 78.6% retracement (€42.00 area). Source: xStation5