Dax Pulls 11260 Into Target
The Dax has plunged a further 3.5% across the morning session on Friday, extending losses of 1.5% from the previous session, as coronavirus fears escalate.
Share this:
The Dax has plunged a further 3.5% across the morning session on Friday, extending losses of 1.5% from the previous session, as coronavirus fears escalate. The morning of losses comes following another volatile session and steep losses on Wall Street.
The number of global cases is closing in on 100,000, whilst the death toll reaches 3,385. The number of cases in Germany has increased to 534. With the number of cases, particularly in Europe rising rapidly increasingly severe measures are being put in place to attempt to safeguard the public. As a result, fears of a huge economic hit are growing, investors are dumping riskier assets such as stocks and flocked towards safer haven bonds.
This week’s 50 basis point rate cut by the Federal Reserve, instead of calming the markets as hoped, the move has reinforced the seriousness of the situation. The response from the Eurogroup and the ECB has been underwhelming.
Data Ignored
Data Ignored
Investors have completed ignored the impressive German factory order data. Factory orders surged in January, jumping 5.5% mom. Well up from December’s -2.1% decline. Despite these figures indicating that the German economy was starting to turn around, this is irrelevant in the face of the hit that the is expected to come from coronavirus.
Not a single stock is moving higher. Travel stock Lufthanza unsurprisingly is the biggest decliner dipping over 5% as bookings dive, auto makers and banks were also tanking hard.
Export Demand & Domestic Demand To Drop
The Dax is particularly vulnerably given that China is its principal trading partner. The economic slowdown in China on the back of coronavirus will result in a decline in German exports. At the same time, the rising number of cases in Germany could see domestic demand slump as well.
Levels to watch
The Dax has dropped over 15% since its all-time high the 20th February. It broke through the ascending trend line which has been in tact since late December 2018 and failed to retake it, in a clearly bearish chart.
Immediate support can be seen at 11455 (today’s low). A break-through here could see the price tumble to 11266 (low 15th August).
On the upside, resistance can be seen at 11769 (today’s high) prior to 12150 (trend line support) and 12200 (yesterday’s high).
The Dax has plunged a further 3.5% across the morning session on Friday, extending losses of 1.5% from the previous session, as coronavirus fears escalate. The morning of losses comes following another volatile session and steep losses on Wall Street.
The number of global cases is closing in on 100,000, whilst the death toll reaches 3,385. The number of cases in Germany has increased to 534. With the number of cases, particularly in Europe rising rapidly increasingly severe measures are being put in place to attempt to safeguard the public. As a result, fears of a huge economic hit are growing, investors are dumping riskier assets such as stocks and flocked towards safer haven bonds.
This week’s 50 basis point rate cut by the Federal Reserve, instead of calming the markets as hoped, the move has reinforced the seriousness of the situation. The response from the Eurogroup and the ECB has been underwhelming.
Data Ignored
Data Ignored
Investors have completed ignored the impressive German factory order data. Factory orders surged in January, jumping 5.5% mom. Well up from December’s -2.1% decline. Despite these figures indicating that the German economy was starting to turn around, this is irrelevant in the face of the hit that the is expected to come from coronavirus.
Not a single stock is moving higher. Travel stock Lufthanza unsurprisingly is the biggest decliner dipping over 5% as bookings dive, auto makers and banks were also tanking hard.
Export Demand & Domestic Demand To Drop
The Dax is particularly vulnerably given that China is its principal trading partner. The economic slowdown in China on the back of coronavirus will result in a decline in German exports. At the same time, the rising number of cases in Germany could see domestic demand slump as well.
Levels to watch
The Dax has dropped over 15% since its all-time high the 20th February. It broke through the ascending trend line which has been in tact since late December 2018 and failed to retake it, in a clearly bearish chart.
Immediate support can be seen at 11455 (today’s low). A break-through here could see the price tumble to 11266 (low 15th August).
On the upside, resistance can be seen at 11769 (today’s high) prior to 12150 (trend line support) and 12200 (yesterday’s high).
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
Oil Shock Hits Bond Yields and Squeezes the Consumer
U.S. 10-year and 30-year bond yields have moved higher as markets reopen after the Labor Day weekend, with the producer price index and the consumer price index landing within days of each other. The European Central Bank decision sits between them, where the economic projections and Christine Lagarde's press conference carry more market risk than the rate move itself. The DAX has also broken below its 21-day exponential moving average, a sign that momentum beneath a resilient index is starting to fade.
DAX, Crude oil forecast: Rising energy prices, yields threaten risk assets
Following a weak handover from Asia, European markets and US indices were under pressure this morning, as rising oil prices and elevated bond yields once again weighed on risk appetite. Among the major European indices, the German DAX will be in firm focus this week, with the ECB’s rate decision coming up on Thursday. That decision is likely to be a hike, as rising oil prices threaten to re-accelerate inflation.
German DAX Records Meet a Treasury Market Under Strain
The German DAX record high is back in reach after four straight higher sessions, helped by cheaper energy and resilient eurozone data.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.