DE40: Europe is catching the American optimism

• Thyssenkrupp is selling part of its stake in steel business to a Czech company. 
• Consumer confidende in Germany rise​s​​​​​​. 
• Traton reports mixed results for 1Q24

Positive signals from the USA regarding the financial performance of leading tech companies are boosting investor confidence in the future of the IT sector. The upbeat mood is reflected in the performance of the German DAX index, which is currently up by 0.76%. Interestingly, despite the slight change, all segments are contributing to the growth so far. The IT sector is experiencing the strongest growth, up by +1.76% thus far. Strong increases are also seen in the consumer discretionary (+0.98%) and healthcare sector (+0.85%).

Investor optimism is also fueled by positive signals regarding consumer confidence in Germany. The consumer confidence index for May stood at -24.2, indicating a solid increase compared to last value of -27.3. This is the highest reading of the index in 2 years. The basis for the increase in the index value remains the growing expectations regarding income improvement.

The 10-year German bonds yields fell by 4 basis points to 2.59%, also helping to sustain bullish sentiments.

European companies are growing during Friday's session. Source: xStation.

Sector distribution in the German DAX index. Source: Bloomberg Finance L.P.

The DAX index contract (DE40) is seeing its second day of gains, surpassing the 1-hour moving average for the last 50 periods (SMA50). This may signal the continuation of the end-of-week gains, although it's difficult to expect dynamic growth allowing the price to reach the week's highs. The bulls' target now is to bring the price closer to the first resistance level at around 18317.6 points. Further rises increase the potential for the SMA50 indicator to be crossed by the faster 15-period moving average (SMA15) from below. Source: xStation.

Company News:

• Thyssenkrupp (TKA.DE) is up by over 8% following news of the planned sale of part of the company's stake. Czech company EP Corporate Group announced the purchase of a 20% stake in the steel production business, which has recently been problematic for Thyssenkrupp. For the German company, this is a step towards partially freeing itself from the highly cyclical business, and the planned sale of shares has been ongoing for some time. So far, the companies have not agreed on the exact amount of the transaction.
• Traton reported mixed results for 1Q24. The company's revenues increased by 5% year-on-year to 11.8 billion euros, and adjusted operating profit amounted to 1.1 billion euros, up by 15% year-on-year. At the same time, the company reported a -3% decrease in orders, with the strongest decline observed in the MAN TGE vans segment (-26% year-on-year). Following the results, the company is experiencing a -1.64% decline.