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:
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.