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European indices trade lower
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Economic advisers to German Chancellor lowered GDP forecasts
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Rheinmetall receives big ammunition order from Hungary
European stock market indices trade lower on Wednesday, erasing part of yesterday's rally. German DAX is top laggard dropping around 1.5% at press time. On the other hand, indices from Portugal and Russia (both RUB- and USD-denominated) are the only European blue chips indices that manage to stay afloat.
Flash German CPI reading for March will be released today at 1:00 pm BST. Market expects an acceleration from 5.1 to 6.3% YoY. However, there are some signs suggesting that a beat is coming. Spanish CPI reading released at 8:00 am BST today showed an acceleration from 7.6 to 9.8% YoY (exp. 8.1% YoY) with fuel and food prices being the main drivers. Also CPI readings from German regions showed major acceleration:
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North Rhine Westphalia: 7.6% YoY vs 5.3% YoY previously
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Bavaria: 7.8% YoY vs 5.3% YoY previously
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Hesse: 8.0% YoY vs 5.7% YoY previously
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Brandenburg: 7.3% YoY vs 5.4% YoY previously
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Baden-Wuerttemberg: 6.3% YoY vs 4.7% YoY
In other news, it was reported that the Council of Economic Advisers to the German Chancellor revised its GDP and inflation forecasts for this year. GDP growth is now expected to reach only 1.8%, down from previous forecast of 4.6%, while inflation is expected to average 6.1% in 2022 and 3.4% in 2023. However, an important caveat is that forecasts were made under assumption that Russian energy supplies will not be cut off completely.
Source: xStation5
DE30 rallied yesterday, along with other European indices, on optimism stemming from Russia-Ukraine talks. However, a pullback can be observed today. DE30 failed to deliver a sustained break above the 14,850 pts resistance zone, marked with local highs from February 23, and started to erase gains. A test of the 50-hour moving average can be observed at press time. If bears succeed with breaking below, a test of the 14,500-14,550 pts support may come next. Key support can be found at the lower limit of a previously-broken trading range in the 14,200-14,250 pts area as this is where the lower limit of Overbalance structure can be found.
Company News
E.ON (EOAN.DE) reached an agreement with a unit of Australian Fortescue Metals Group. Two companies agreed to supply 5 million metric tonnes of green hydrogen to Europe by 2030. Hydrogen will be produced by Fortescue and distributed on the Old Continent by E.ON.
Rheinmetall (RHM.DE) is trading higher today following news of a big order received from Hungary. Company informed that it has received an order from the Hungarian Ministry of Defense to supply ammunition for armored personnel carriers, tanks and artillery. Order is said to be worth several hundred million euros. Ammunition will be produced by Rheinmetall factories in Western Hungary that are currently under construction. Deliveries are expected to begin in 2023.
Analysts' actions
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Henkel (HEN3.DE) downgraded to "hold" at Bankhaus Metzler. Price target set at €73.00
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Deutsche Euroshop (DEQ.DE) rated "neutral" at Oddo BHF. Price target set at €18.00
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Grand City Properties (GYC.DE) downgraded to "neutral" at JPMorgan. Price target set at €23.00
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KION Group (KGX.US) downgraded to "hold'' at Societe Generale. Price target set €67.50
Rheinmetall (RHM.DE) is trading higher today, following news of a big ammunition order from Hungary. Stock snapped a downward correction and bounced off the lower limit of local market geometry. Advance was halted at the 50-hour moving average (green line, €190 area) but share price continues to trade nearby. Source: xStation5
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