DE40: Indices gain ahead of US inflation data

• European indices trade higher
• DE40 tests short-term resistance in the 17,820 pts area
• Wacker Chemie gains after Q1 forecasts

European stock market indices launched today's cash trading higher. German DAX trades around 0.3% higher on the day, while UK FTSE 100 jumps 1.1% and French CAC40 trades flat. Today is all about US inflation data, with CPI report for February scheduled for release at 12:30 pm GMT. A lower-than-expected reading would be welcome by stock investors as it would hint that May could be the timing for the first rate cut rather than June.

Source: xStation5

Taking a look at a chart on 30-minute interval, we can see that a recent recovery move on DAX futures (DE40) was halted in the 17,865 pts area, and the index began to pull back later on. However, this pullback was halted near the 50% retracement of the downward impulse launched on March 8, 2024. Index is currently trying to climb back above the resistance zone ranging between 17,820 pts and 61.8% retracement. Index is expected to experience elevated volatility near 12:30 pm GMT when US inflation data is released.

Company News

Porsche (P911.DE) said that it expects return on sales of 15-17% in 2024, below 17.4% expected by analysts and below 18% reported for 2023. Porsche maintains a medium-term profitability target of 17-19% and a long-term profitability above 20%. Company expects 2024 sales of €40-42 billion. Expectations for lower margins in 2024 are related to the company rolling out 4 new EV and hybrid car models.

Wacker Chemie (WCH.DE) said that it expects 2024 sales to be €6.0-6.5 billion, compared to €6.4 billion in sales reported for 2023. Full-year EBITDA is seen at €600-800 million (exp. €774 million), down from €824 million in 2023. Wacker Chemie continues to expect long-term sales of over €10 billion annually, with EBITDA margin exceeding 20%. While the company said that sales in the first two months of 2024 were lower than last year, it has provided an upbeat Q1 guidance of 'around €1.5 billion' in sales and EBITDA to be at the same level as in the prior quarter.

Analysts' actions

• MTU Aero (MTX.DE) downgraded to 'sell' at Redburn. Price target set at €195.00
• GEA Group (G1A.DE) upgraded to 'buy' at RBC. Price target set at €44.00
• Deutsche Post (DHL.DE) downgraded to 'neutral' at UBS. Price target set at €41.00

Wacker Chemie (WCH.DE) is trading 5% higher today, following release of Q1 guidance that is seen as positive. Stock tested €110.00 resistance zone today, marked with previous price reactions as well as the upper limit of the market geometry, but failed to break above it so far. Source: xStation5