DE30 tests upper limit of the channel

• European markets add to yesterday's gains

• DE30 tests upper limit of the upward channel at 14,450 pts

• Adidas issued upbeat 2021 forecast

European markets trade higher on Wednesday with German DAX reaching a fresh all-time high just a notch below 14,500 pts. Blue chips indices gain all across the Old Continent with French and Pollihs equities being outperformers. UK FTSE 100 (UK100) is the only major European index that trades lower today as it drops 0.1%.

Source: xStation5

DE30 is testing the upper limit of the short-term upward channel in the 14,450 pts area. Index has been struggling with this hurdle yesterday but has failed to break above so far. In case we see a break above, an upward move equal to the width of the channel may follow. This would imply a target at around 15,300 pts. 127.2% retracement of the pandemic drop can be found at 15,400 pts therefore 15,300-15,400 pts may be the next major resistance zone to watch.

DAX members at 10:30 am GMT. Source: Bloomberg

Company News

Adidas (ADS.DE) reported Q4 sales of €5.55 billion, down 5% YoY (exp. €5.48 billion). Operating profit declined 8.2% YoY to €225 million (exp. €197.8 million) while net income dropped 24% YoY to €138 (exp. €130 million). Operating margin declined from 4.2% in Q4 2019 to 4.1% in Q4 2020 (exp. 3.63%) while gross margin declined from 49% to 48.7% (exp. 49%). Company proposed €3 dividend per share for 2020 (exp. €1.8). Adidas expects 2021 gross margin at around 52% and operating margin at 9-10%. Full-year 2021 net income is expected at €1.25-1.45 billion. Company also expects sales growth to average 8-10% a year in the 2021-2025 period and net income rising 16-18% on average. Forecasts were better-than-expected.

Shares of K+S (SDF.DE) jumped yesterday after Deloitte issued an unqualified audit opinion. Deloitte said that K+S should have reported €140 million lower impairment loss in its 2020 financial report. K+S stock slumped in mid-February when BaFin, German financial watchdog, said it will launch a probe into the company's accounting practices. However, yesterday's upward move has been fully erased already and stock is plunging today.

Brenntag (BNR.DE) gains after reporting 2020 results. Company reported 8.2% YoY sales drop to €11.78 billion, in-line with estimates. Operating EBITDA increased 5.6% YoY to €1.06 billion (exp. €1.03 billion). After-tax profit increased 1% YoY to €473.8 million. EPS was unchanged year-over-year at €3.02. Company expects 2021 operating EBITDA at €1.08-1.18 billion.

Analysts' actions

• Deutsche Telekom (DTE.DE) upgraded to "buy" at Citi. Price target set at €18.50

• Continental (CON.DE) cut to "underperform" at Oddo BHF. Price target set at €110.00

Shares of Adidas (ADS.DE) rallied following upbeat forecasts presented by the company. Stock broke above the long-term price zone at €288.00 today and is looking towards recent local high. €300 area that marks YTD highs is the near-term resistance to watch. Source: xStation5