DE30 tests 13500 pts as risk-on moods prevail

• German trade data miss overshadows beat in industrial production

• DE30 surges to 2-year high on easing of Middle East tensions

• Evotec (EVT.DE) gains on new alliance with Bayer (BAYN.DE)

European stock markets enjoy strong opening after Donald Trump de-escalated tensions with Iran and showed no willingness to engage in a war. Equities and equity futures gain all across the World. DAX is the strongest blue-chips index in Europe on Thursday morning. Tech stocks and telecoms are the best performing sector in Europe while oil companies are the only ones to trade lower as a group.

While beat in industrial production figures is a good thing, one should not forget that Germany is experiencing the worst year of a decade. Source: Macrobond, XTB Research

A pack of the German data was released today at 7:00 am GMT. Industrial production figures for November showed an increase of 1.1% MoM against an expected 0.8% MoM. The reading can be seen as a relief after yesterday’s factor order released turned out to be a major disappointment. Solid print was possible thanks to pharmaceutical production rebounding off the low year-ago base. Industrial production beat is to some extent overshadowed by lacklustre trade data that was released at the same time. Exports in November dropped 2.3% MoM (expected -0.9% MoM) while imports declined 0.5% MoM in spite of an expected 0.1% MoM advance. Germany experienced a drop of exports to almost every major trading partner in November with exports to the United Kingdom suffering the most.

German exports to most of its major trading partners dropped in November. However, robust trade with Poland helped the overall YoY figure stay afloat. Source: Macrobond, XTB Research

DE30 benefits from risk-on moods and surges to the highest level in 2 years. Morning surge on the German benchmark was halted by the upper limit of the market geometry that equals the range of the upward impulse from 12-13 December 2019. Having said that, the area around 13520 pts handle could serve as a near-term support to watch and a break higher would pave the way towards the 127.2% exterior retracement of downward of recent downward move (13600 pts). Note that this level coincides with an intraday ATH for DE30 therefore resistance there is likely to be stronger. Should a pullback occur, traders may look for support in the 13420-13430 pts area.

Source: xStation5

Company News

Easing of Middle East tensions triggered a risk-on rally on the stock markets. Tech stocks like Infineon (IFX.DE) or Wirecard (WDI.DE) can be found among DAX leaders. Carmakers can be found among laggards after data showed a second straight year of declining car sales in China. Nevertheless, even the weakest DAX member is trading 0.35% higher today.

Evotec (EVT.DE) gains today after forming an alliance with Bayer (BAYN.DE). The two companies will team up on development of clinical candidates for the treatment of polycystic ovary syndrome. Under the terms of an agreement Evotec will receive €6.5 million in upfront payment and €10 billion in research payments for the next five years. Should the cooperation be successful, Evotec could reap over €330 million in milestone payments.

Analyst actions

• BMW (BMW.DE) raised to “outperform” from “neutral” at Exane. Price target set at €87

• HeidelbergCement (HEI.DE) cut to “underweight” from “equal-weight” at Morgan Stanley. Price target set at €67

• Aixtron (AIXA.DE) raised to “buy” from “hold” at Bankhaus Lampe. Price target set at €12.50

DAX members at 9:03 am GMT. Source: Bloomberg