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European indices drop, techs lag
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DE30 tests resistance at 38.2% retracement
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SAP announces €1 billion share buyback
European stock markets are trading lower during the final session of the week. Markets on the Old Continent are reacting to yesterday's sell-off on Wall Street with tech sector and consumer products companies being top underperformers. Russian RTS (RUS50) is top laggard among European blue chips indices, dropping 1.5%. Indices from the UK and Belgium are top performers, trading more or less flat.
The Federal Statistical Office released a flash estimate of the German 2021 GDP growth today. Data met market expectations and showed a growth of 2.7%. The German economy is said to have shrank between 0.5 and 1% in the final quarter of 2021 as a worsening pandemic situation curbed output. German GDP in 2021 was 2% lower than in pre-pandemic 2019.
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Source: xStation5
DE30 plunged around 200 points yesterday in the evening as moods on Wall Street turned sour. An attempt to launch a recovery move can be spotted today but the resistance zone marked with the 38.2% retracement of the downward move started on January 5, 2022 (15,925 pts area) has not been breached yet. Taking a look at the DE30 chart on H1 interval, we can see that the German index has been reacting to retracement of the aforementioned downward move recently therefore traders should focus on these as potential swing levels. Having said that, in case we see a break above the 15,925 pts resistance, the next target for bulls could be 16,000 pts area (50% retracement).
Company News
SAP (SAP.DE) announced preliminary Q4 2021 results. Company said that its cloud revenue jumped 28% YoY in Q4 2021, to €2.61 billion (exp. €2.5 billion). Total sales jumped 6% YoY, to €7.98 billion. SAP expects 2022 cloud revenue to increase 26% at constant FX and reach €11.85 billion. The German company also announced that it will buy its own shares worth up to €1 billion in the February-December 2022 period. Full results will be published on January 27, 2022.
Wacker Chemie (WCH.DE) announced preliminary full-year results today. Company said EBITDA came in around €1.5 billion (exp. €1.41 billion) while sales reached around €6.2 billion (exp. €6.09 billion).
Analysts' actions
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Aixtron (AIXA.DE) upgraded to "hold' at Stifel. Price target set at €19.00
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KION Group (KGX.DE) rated "outperform" at Exane. Price target set at €126.00
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Zalando (ZAL.DE) upgraded to "buy" at DZ Bank. Price target set at €80
Shares of SAP (SAP.DE) gained at the beginning of today's session after the company announced upbeat preliminary results and launch of share buyback programme. However, optimism quickly faded and stock erased gains. Price is attempting to make a break below the key €120.00 price zone that hosts the 200-session moving average (purple line), upward trendline and previous price reactions. Source: xStation5
