DAX Plunges On Coronavirus Fears & Weak IFO Data
Fiona Cincotta January 27, 2020 10:52 AM
The DAX has joined global indices tanking 2.2% in early on Monday as the Wuhan coronavirus outbreak weighs on risk sentiment. At the time of writing the deadly virus had killed 80 people and over 2750 are infected. Chinese authorities have 17 cities, with 40 million inhabitants in lock down in an attempt to control the spread of the virus.
IFO Data Disappoints
Adding to Germany’s woes was IFO business confidence data,which undershot in January, printing at 95.9 vs expectations of 97. The IFO executives outlook index unexpectedly fell to 92.9, driven by dwindling prospects in the service sector and construction sector, sectors which had supported Europe’s largest economy in recent quarters. Perhaps the only positive from the report was that manufacturing continues on show signs of stabilization; whilst the sector is still shrinking it is doing so at a slower pace.
All in all, the data has dashed hopes that rising optimism among companies would lead to a broader economic recovery. Instead the data sounds a warning bell for those expecting a solid rebound in German economic growth.
Levels to watch:
The DAX gapped lower on the open on Monday and the selloff is gathering steam as investors take risk off the table. The index has dropped through its 50 & 100 sma on 4-hour chart and is fast approaching its 200 sma at 13195 as the bears take control.
Immediate support can be seen at today’s low of 13285, prior to 200 sma at 13195. A breakthrough here could open the doors to support at 13110 (low 8th Jan) before 12950 (low 6th Jan).
On the flip side, immediate resistance sits at 13399, today’s high, before 13604 (Friday’s high) and 13640 (high 22nd Jan).
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.