DAX Gets a Boost from Earnings Report & Profit Taking

German stocks get some relieve from positive earnings reports, energy and telecoms stocks lead the way.

• Siemens, Deutsche Telecom beat expectations
• Profit taking as market recovers from lows
• Technicals show area of strong support

The DAX recovered some of the lost ground shed during this week, after the likelihood of US tariffs raised concerns on EU exports capacity.

Siemens AG (SIE) saw an exceptional quarter; SIE shares are up over 8% this morning. The earnings report beat expectations for profits by 4%, and revenue from core industrial business outperformed by 7%.

Another stock that reported positive earnings is Deutsche Telekom AG (DTE), which is up 3% on the day. Quarter earnings rose to €11.1 billion, compared to forecasts of €11.05 billion. The company adjusted its FY earnings forecast to €43 billion from €42.9 previously.

DTE added 327,000 mobile contracts in the last quarter, increasing mobile customers in September by 2.7%. The telecoms giant also posted a 32% growth in FCF, an important metric to gauge dividend payouts.

Overall, the DAX jumped 1.15% in this morning’s trading spurred by improved sentiment from earnings reports and profit taking. The index was 3% at one point this week, and traders will be looking for any good news to take back some short profits.

Technical View

The day chart above for the DAX we can see a market in a bull trend with prices above the Ichimoku cloud. The last bullish leg gave way to a major retracement, which found support on the cloud.

Yesterday’s candle produced a formation that usually leads to a pivot. If today’s candle ends with a green close, we will have confirmation of the pivot. The top of the cloud remains the immediate support level.

This level also coincides with support from a previous high of 19,050 (red line). I expect the market to continue higher from here, with the next major resistance at 19,681 (blue line). The level is the all-time high, and the market should break past it to confirm the bullish trend.