- Summary:
- The DAX index rose today as Deutsche Bank reported better than expected earnings. Adidas earnings disappointed while Bayer received a coronavirus bounce
The DAX index is among the best-performing indices in Europe today. The index rose by more than 2.50% as investors reacted to the positive earnings by Deutsche Bank. In contrast, the Stoxx 50 index, CAC, and FTSE 100 rose by more than 1% while FTSE MIB gained by more than 2.60%.
Deutsche Bank Pushes DAX Index Higher
Deutsche Bank, the troubled lender was the best-performing stock in the DAX index. Its stock rose by more than 10% after the bank released its first quarter earnings earlier than expected.
The bank’s pre-tax profit rose to €206 million in the first quarter. This was better than the €269 million loss that analysts polled by Bloomberg were expecting. Still, this was worse than the €292 million profit it made a year before. At the same time, the net profit declined to €66 million from the previous €201 million. This decline was mostly because the bank allocated €500 million in provisions for credit losses.
Meanwhile, the bank said that it would remove its capital targets as it tries to help clients in this difficult time. It also said that it was reviewing its capital and leverage ratios as it continued to battle slow growth due to the pandemic.
Adidas stock rise as profit falls
Adidas, which is a member of the DAX index, reported that its profit dropped by 95% to €31 million in the first quarter. Its revenue also declined by 19% to €4.75 billion. This was expected because most retailers have closed. Also, sporting activities have disappeared as countries continue to battle the pandemic. The company also warned that the current quarter will be more affected since it has closed a substantial amount of its stores. Its stock rose by more than 2%.
Bayer stock also rose by almost 3% even after the company warned of liquidity challenges. The company said that its net income rose by 20% to €1.49 billion while its EPS rose by 19.7% to €1.27. Sales increased by 4.8% to €12.84 billion. This growth was because the pandemic had led to increased demand in some of its divisions.
Other top performers in the DAX index today were Lufthansa, Infineon, Linde, and Daimler while the only laggard was Vonovia, whose stock declined by 0.40%.
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DAX Index technical outlook
On the daily chart, the DAX index has consolidated between €10,800 and €10,195. The index is also trading slightly above the 38.2% Fibonacci retracement level. I drew this retracement by connecting this year’s highest and lowest points.
With today’s bounce, the index managed to move above the important support shown in pink below. Therefore, I expect the index to attempt to retest the equidistance channel support at about €11,000. This price is also along the 50% retracement level and slightly above the 50-day EMA.
The alternative scenario is where the index finds significant resistance at the €10,549 level and attempts to retest the lower support at €10,300.