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European markets extend post-election rally
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DE30 tests 12,500 pts
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HeidelbergCement, Munich Re and Commerzbank reported earnings
European markets are trading higher along US futures as the post-election rally continues. Decisions on new lockdowns (i.e Greece announced 3-week national lockdown starting from Saturday) do not dent moods and DAX is testing 12,500 pts. Even weaker euro-area growth forecast for 2021 from the European Commission was overlooked by the markets (+4.2% vs +6.1% previously).
DE30 enjoys a post-election rally and trades over 10% above Friday's low. The German index recouped over 60% of losses made during October's downward move and is now testing a resistance zone marked by 12,500 pts handle and 61.8% retracement. However, investors should keep in mind that Trump's challenge to election results may be a trigger for risk-off flows. Failure to break above 12,500 pts could trigger a pullback and herald a test of the support zone marked by 12,100 pts, 38.2% retracement and 200-session moving average (purple line). Source: xStation5
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Munich Re (MUV2.DE), the German reinsurance group, released the Q3 earnings report today. Gross written premiums increased 3% YoY, to €14.15 billion (exp. €13.95 billion). Company realized a 2.7% return on investments in the period and 3.6% return on equity. However, net profit at €199 million was 77% lower compared to Q3 2019. Munich Re decided not to issue guidance amid coronavirus-related uncertainty.
HeidelbergCement (HEI.DE) said that results from operations before depreciation and amortisation increased 4.6% YoY in the January-September period to €2.73 billion. Thanks to solid results in Q3 2020, the company now expects full-year results to be above 2019 levels.
Commerzbank (CBK.DE) reported Q3 revenue at €2.03 billion, slightly below €2.06 billion expected. Net loss at €69 million was also deeper than expected €49.4 million loss. German lender confirmed the previous outlook saying that it still expected full-year provisions for bad loans to come in the €1.3-1.5 billion range. Moreover, Commerzbank also repeated that its expects a net loss in full-2020. However, the bank cautioned that as lockdowns are returning outlook for bad loan losses could worsen.
DAX members at 10:48 am GMT. Source: Bloomberg
