DAX Extends Gains On US Stimulus Package Hopes
Dax rallies for second straight session, but can it last?
Share this:
Whilst the US are clearly late to the stimulus party, they certainly know how to make an entrance. European stocks are pointing to a second straight session of gains on Tuesday as traders cheer US Senators finally agreeing a $2 trillion stimulus deal. The deal, expected to be voted on today, will provide economic relief to American taxpayers and businesses hit by the coronavirus pandemic. Unprecedented times call for unprecedented measures. This is set to be the largest congressional bailout in history.
To put some perspective on the size of the deal, at $2 trillion it dwarfs the $800 billion Obama stimulus that passed 5 months after the financial crash – it would appear that some lessons have been learnt. This move is combined with the Fed’s moves of slashing rates to almost 0% and unlimited bond buying, creating a package which is doing some heavy lifting work in the markets.
Stocks indices surged in the previous session on the whiff of an agreement, with the Dax posting 11% gains. The risk on sentiment is boosting stocks again in early trade on Wednesday. The question is whether the rally can continue?
Is the tide turning?
We still need to see an improvement in coronavirus numbers and a peaking in cases in US before the rally really takes off. Until then we can expect to see relief rally days but also days when the data is just plain scary and the market sells off. Fast forward 2 months from here and we expect to see some phenomenal buying opportunities.
We still need to see an improvement in coronavirus numbers and a peaking in cases in US before the rally really takes off. Until then we can expect to see relief rally days but also days when the data is just plain scary and the market sells off. Fast forward 2 months from here and we expect to see some phenomenal buying opportunities.
German sentiment data up next
The focus will now shift to German IFO Survey for March. The sentiment data is not expected to be pretty, as business confidence collapses; the very measures that governments are implementing to protect the public from the killer virus results in demand for goods and services evaporating. The preliminary reading last week showed a big decline to 87.7 from 96, the revised number could show another drop.
The focus will now shift to German IFO Survey for March. The sentiment data is not expected to be pretty, as business confidence collapses; the very measures that governments are implementing to protect the public from the killer virus results in demand for goods and services evaporating. The preliminary reading last week showed a big decline to 87.7 from 96, the revised number could show another drop.
Levels to watch
The Dax has jumped 1.8% on the open and is trading at 9910. On the 4 hour chart, it broke above its 50 sma yesterday and has made an attempt on 100 sma at 9971. A move above tis level could see more bulls jump in.
Immediate resistance can be seen at 9971 (100 sma) prior to 9995 (today’s high so far) prior to 10965 (high 11th March).
Support can be seen at 9541 (today’s low) prior to 8870 (50 sma) and 7970 (low 19th March).
Whilst the US are clearly late to the stimulus party, they certainly know how to make an entrance. European stocks are pointing to a second straight session of gains on Tuesday as traders cheer US Senators finally agreeing a $2 trillion stimulus deal. The deal, expected to be voted on today, will provide economic relief to American taxpayers and businesses hit by the coronavirus pandemic. Unprecedented times call for unprecedented measures. This is set to be the largest congressional bailout in history.
To put some perspective on the size of the deal, at $2 trillion it dwarfs the $800 billion Obama stimulus that passed 5 months after the financial crash – it would appear that some lessons have been learnt. This move is combined with the Fed’s moves of slashing rates to almost 0% and unlimited bond buying, creating a package which is doing some heavy lifting work in the markets.
Stocks indices surged in the previous session on the whiff of an agreement, with the Dax posting 11% gains. The risk on sentiment is boosting stocks again in early trade on Wednesday. The question is whether the rally can continue?
Is the tide turning?
We still need to see an improvement in coronavirus numbers and a peaking in cases in US before the rally really takes off. Until then we can expect to see relief rally days but also days when the data is just plain scary and the market sells off. Fast forward 2 months from here and we expect to see some phenomenal buying opportunities.
We still need to see an improvement in coronavirus numbers and a peaking in cases in US before the rally really takes off. Until then we can expect to see relief rally days but also days when the data is just plain scary and the market sells off. Fast forward 2 months from here and we expect to see some phenomenal buying opportunities.
German sentiment data up next
The focus will now shift to German IFO Survey for March. The sentiment data is not expected to be pretty, as business confidence collapses; the very measures that governments are implementing to protect the public from the killer virus results in demand for goods and services evaporating. The preliminary reading last week showed a big decline to 87.7 from 96, the revised number could show another drop.
The focus will now shift to German IFO Survey for March. The sentiment data is not expected to be pretty, as business confidence collapses; the very measures that governments are implementing to protect the public from the killer virus results in demand for goods and services evaporating. The preliminary reading last week showed a big decline to 87.7 from 96, the revised number could show another drop.
Levels to watch
The Dax has jumped 1.8% on the open and is trading at 9910. On the 4 hour chart, it broke above its 50 sma yesterday and has made an attempt on 100 sma at 9971. A move above tis level could see more bulls jump in.
Immediate resistance can be seen at 9971 (100 sma) prior to 9995 (today’s high so far) prior to 10965 (high 11th March).
Support can be seen at 9541 (today’s low) prior to 8870 (50 sma) and 7970 (low 19th March).
Related tags:
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
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.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.