DE30 tests 13,600 pts resistance in a recovery attemp

• European indices try to recover from yesterday's drop

• DE30 tests 13,600 pts resistance zone

• Bayer, Fraport and Munich Re reported Q1 earnings

European stock market indices are trading higher on Tuesday in an attempt to recover from yesterday's drop. German DAX is trading 1.6% higher and is one of the best performing major European indices. Polish WIG20 (W20) is a top laggard as it fails to catch a bid and launch recovery, trading 0.3% lower on the day.

German ZEW indices for May were released today at 10:00 am BST. Economic expectations subindex improved from -41.0 in April to -34.3 pts in May (exp. -42.0 pts). Current conditions subindex deteriorated from -30.8 to -36.5 pts (exp. -35.0 pts). 

Source: xStation5

DE30 dropped to the lower limit of the downward channel yesterday. Downward move was halted in the 13,330 pts area and the index started to recover. It has run into the first obstacle - 13,600 pts resistance zone, that is marked with late-April local low. A break above would pave the way towards the 13,900 pts resistance where the 50-period moving average (H4 interval) can also be found. Nevertheless, the overall trend on the index remains bearish and only a break above the upper limit of the channel (14,180 pts currently) would make outlook more bullish.

Company News

Bayer (BAYN.DE) reported Q1 results. Company had €14.64 billion in sales (exp. €13.66 billion) and generated adjusted EBITDA of €5.25 billion (exp. €4.55 billion). Core EPS reached €3.53 (exp. €2.95). That's a 27.5% YoY increase in earnings. Bayer said that the Russia-Ukraine war does not have a negative impact on its sales. Strong results were driven by agriculture business that managed to offset weaker performance of pharmaceutical business.

Munich Re (MUV2.DE) reported Q1 results. Company had €16.83 billion in gross written premiums during the quarter (exp. €15.33 billion) and generated operating profit of €780 million (exp. €877 million). Munich Re still expects full-year profit to reach €3.3 billion and full-year return on investment to exceed 2.5%. However, a full-year gross written premium forecast was boosted from €61 to €64 billion.

Fraport (FRA.DE) reported a Q1 net loss of €118.2 million, wider than €77.5 million loss reported in Q1 2021 (exp. -€59 million). Revenue was 40.2% YoY higher at €539.6 million as passenger demand continued to recover. EBITDA increased almost 76% YoY to €70.7 million (exp. €83 million). Fraport maintained a full-year outlook and said it still expects 39-46 million passengers in Frankfurt, or 55-65% pre-pandemic levels.

Analysts' actions

• Fresenius (FRE.DE) downgraded to "hold" at HSBC. Price target set at €39.00

Bayer (BAYN.DE) launched today's trading higher, following release of solid Q1 results. However, the jump in share price was already erased and stock is trading little changed on the day. Another attempt of breaking below the support zone at 38.2% retracement of recent upward impulse cannot be ruled out and a break below would make technical outlook more bearish. Source: xStation5