What Next for the DAX Index After the Worrisome Bayer Earnings?


The DAX index is wavering today as investors continue to reflect on European corporate earnings. The index is trading at €12,645, which is a few points above the yesterday’s close. Other indices in Europe are mixed, with the FTSE 100 falling by 0.30% and CAC 40 and Stoxx 50 rising by 0.40% and 0.15%, respectively.

Weak earnings by Bayer hurt the DAX

Bayer, the giant pharmaceutical company is the worst-performing stock in the DAX index today. The stock price is down by more than 3.5% after the company reported weak earnings. In total, the company booked a loss od more than 9.5 billion euros, which was a remarkable decline from a 404 million euros profit in the same quarter in 2019.

This decline was mostly because of the ongoing legal issues surrounding its Monsanto acquisition in 2018. In June, the firm agreed to pay $10 billion to plaintiffs although the case is still ongoing.

In total, the company announced that its EBITDA rose by 5.6% to 2.8 billion euros while its core earnings per share rose by 5%. Bayer share price is trading at 48.25 euros.

Infineon earnings rise

While Bayer had a bad quarter, Infineon, another DAX index constituent flourished. The company’s revenue rose to more than 2.17 billion euros in the third quarter. Its segment result was 220 million euros at a margin of 10.1%. The company said that it expects to make 2.3 billion euros in the fourth quarter and about 8.5 billon euros in the full year. The CEO said:

“Infineon has so far coped well with the challenging situation caused by the coronavirus pandemic. As a company, we reacted quickly to the new situation and established a framework that has enabled us to stabilize our business.”

Infineon share price is the best-performing in the DAX index. It is up by more than 5.6% and is trading at 27 euros.

Other top movers in the DAX Index

The top movers in the DAX index are Infineon, MTU Aero, Daimler, BMW, and Continental have risen by more than 3%. On the other hand, Bayer Share price leads losses followed by Linde, SAP, RWE, and Beiersdorf.

DAX Index technical forecasts

The daily chart below shows that the DAX index had its best day in weeks yesterday. The price is still slightly above the 50-day and 100-day exponential moving averages. Also, the price is above the ascending trend line that is shown in green. This line connects the lowest level on May 15 and August 3. Further, the DAX index is along the 78.6% Fibonacci retracement level. Therefore, the index is likely to continue rising as bulls target the next resistance at 13,291.

On the flip side, a move below 12,265 will invalidate this trend. This price is at the intersection of last week’s low and the ascending line.

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DAX Index forecast

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