DE30 tests 14,050 pts support again

• European stock markets trade lower

• DE30 tests 14,050 pts support again

• Deutsche Telekom increases T-mobile US stake to 48.4%

European stock market indices are trading lower today. Equities continue to underperform amid prospect of tighter monetary conditions, war-related uncertainty and weakening Chinese economy. German DAX (DE30) is one of European top laggards, dropping 0.6% at press time. Polish WIG20 (W20) is the only European blue chips index that manages to stay afloat. BoC decision later in the day (3:00 pm BST) should not have a major impact on stock markets.

Source: xStation5

DE30 continues to trade within a downward channel. Index broke below the 14,050 pts support zone yesterday but failed to sustain the move and bulls managed to push the price back above it. Another test of the aforementioned support zone is being made at press time. Should we see a break below, the next support to watch can be found in the 13,800 pts area. Textbook range of a breakout from ongoing 14,050-14,350 pts trading range can be found slightly below this zone and around 60 points above the lower limit of the channel. Weakness on global stock markets is being more and more evident. While we do not see massive declines, any attempts of launching an upward move are quickly halted.

Company News

Deutsche Telekom (DTE.DE) bought T-mobile US shares from SoftBank Group worth $2.4 billion. Following a purchase of 21.2 million shares at an average price of $113 per share, Deutsche Telekom now holds 48.4% stake in T-mobile US. As the German telecoms hinted in the past it is interested in increasing its stake in US businesses, an attempt of acquiring a majority stake (>50%) cannot be ruled out.

Fraport (FRA.DE) reported a 217.9% YoY jump in the number of passengers in March 2022 at Frankfurt Airport. While passenger air traffic continues to recover from a Covid-19 hit with seat load factor increasing from 63.5% in February to 71.2% in March, the situation does not look as rosy when it comes to cargo volumes. Total cargo volume measured in metric tonnes dropped 13.1% YoY. Air freight volumes were 13.1% YoY lower while air mail volumes were 10.2% YoY lower. This is another hint of a looming economic slowdown.

Analysts' actions

• Sartorius (SRT.DE) upgraded to "buy" at Berenberg. Price target set at €490.00

• Adidas (ADS.DE) downgraded to "reduce" at Baader Helvea. Price target set at €190.00

• Covestro (1COV.DE) downgraded to "hold" at Stifel. Price target set at €53.00

• BASF (BAS.DE) downgraded to "hold" at Stifel. Price target set at €63.00

• Aurubis (NDA.DE) downgraded to "add" at Baader Helvea. Price target set at €110.00

• Siemens Energy (ENR.DE) downgraded to "neutral" at Exane. Price target set at €22.00

Deutsche Telekom (DTE.DE) continues to recover from a recent correction that pushed share price down to support zone marked with 50% retracement of downward move launched in August 2021. Stock broke back above the 200-session moving average (purple line) and is now testing the resistance zone marked with 61.8% retracement (€17.20 area). In case it is cleared, attention will turn towards recent local highs in the €17.80 area. Source: xStation5