DE30: Zalando surges on unexpected profit

Summary:

  • ZEW Economic Sentiment improves in April but details are worrying
  • DAX (DE30 on xStation5) at the highest since October 2018
  • Zalando (ZAL.DE) leads European retailers higher after announcing unexpected profit

Stock markets in Europe benefit from upbeat moods that were present during the Asian trading hours. Gains can be seen all across the Old Continent, just as it was in Asia. Euro Stoxx 600 index is advancing for the fifth straight session being boosted by corporate earnings. Banks led advance thanks to positive settlement UniCredit (UCG.IT) has struck with the United States. Apart from that, retailers were also outperforming on the back of Zalando’s (ZAL.DE) solid quarterly results.

DAX technical analysis

DE30 (DAX futures underlying) finally managed to break above the 61.8% Fibo level of the downward move that occurred in the second half of 2018. However, the area just above the aforementioned hurdle saw some price action in the third quarter of 2018 therefore one cannot rule out that bears will try to push the price lower. In such case bulls could find some support near the previous local low (11870 pts). Source: xStation5

ZEW Economic Sentiment improves in April but details raise questions

The ZEW institute released the newest pack of its famous surveys today. In both cases we have seen a continuation of the previous trends - expectations’ gauge moved higher while current economic situation index dipped further. What should be noted is that the former is at the highest level in a year while the latter is at the lowest level since November 2014. The headline Economic Sentiment index moved from -3.6 pts in March to 3.1 pts in April, way higher than expected bounce to 0.8 pts. However, as the bulk of this gain comes from improvement in expectations one should not be too optimistic. Expectations are more likely to change while currency situation should be more factual.Both ZEW gauges continue previous trends. Note that the current economic situation index is at the lowest level since late-2014. Source: Macrobond, XTB Research.

Company News

UniCredit (UCG.IT), namely bank’s German branch, was found guilty of helping Iranians omit the US sanctions. A settlement has been struck and the case is closed. UniCredit will pay $1.3 billion in fines. While the figure may look big it should be noted that UniCredit made even bigger provisions for the case. The lender highlighted it and said that the release of abundant provisions should have positive impact on Q1 earnings of approximately €300 million.

Zalando (ZAL.DE) is the best performing stock from both Euro Stoxx 600 and MDAX indices today. As a reason behind an over 10% surge this morning one can name unexpected profit the retailer has announced in the first quarter of the year. Namely the company said that EBIT was in “single-digit millions of euros” while analysts’ median estimate pointed to a loss of around €10 million. Full Q1 report will be published on 2nd May. Zalando is trading 85% higher YTD.

Deutsche Lufthansa (LHA.DE) released its first quarter results today as well. However, unlike Zalando, the German carrier disappointed. Lufthansa reported an EBIT loss of €336 million, around 80% bigger than the median estimate suggested. The company reasoned lacklustre performance with higher fuel costs as well as more intense fare wars with competitors. Shares were trading even 5% lower earlier but this drop was already erased. Full Q1 report will be published on 30th April.DAX members at 10:38 am CET. Source: xStation5

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