Top Story

DAX: EU stocks less jubilant amid threat of new US tariffs

Sentiment appears a bit cautious following the release of disappointing global data and after the US threatened new tariffs on the EU. But with G20 and OPEC meetings behind us, the focus is turning back to economic data for market participants. On that front, it has been a poor start to the week. After Monday’s very disappointing showing from the global manufacturing sector, we have had some more bad numbers from Europe this morning. Consequently, European stocks have failed to build on Monday’s gains and there is a growing risk that the indices may ease back further to close their weekend gaps at least.

European data continues to soften

German retail sales fell 0.6% month-over-month when an increase of 0.5% was expected, while Spanish unemployment fell less than expected. In the UK, activity in the construction industry slumped sharply in June, to its lowest level in a decade, as purchasing managers in housebuilding, commercial and civil engineering all reported sharply deteriorating conditions. Confidence was hit because of ongoing Brexit uncertainty, causing delays in projects.

DAX could ease back a little

Although the FTSE broke to a new 2019 high today as the pound slumped on the back of poor UK data, the mainland European indices were less jubilant, no doubt because of the threat of new tariffs on the EU from the US. So, we could see the likes of the German DAX index close their gaps created at the weekend, base for a while, before they can potentially resume their bullish trends.

In fact, the DAX has managed to find support from the “key support area” we had highlighted last Tuesday and it has already reached our intended target above the 12455 area. But like the S&P 500 we wrote about yesterday (link already provided above), I think there is potential for short-term weakness for the DAX here as investors digest the latest fundamental developments and await further impetus later on in the week. The new support levels to watch now are at 12440 and 12340, levels which were previously resistance. However, any move below the most recent low at 12170 would invalidate the bullish bias in the short-term outlook.

Source: Trading View and FOREX.com. Please note this product may not be available to trade in all regions.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

OPEN AN ACCOUNT