Senior Market Strategist

Total Content 240

Daily Reports 17

German DAX under pressure

By David Morrison  |  07/02/2019 15:02
”german

Germany’s DAX peaked just over a year ago. Recent data releases highlight recession fears
 
In contrast to the major US stock indices which, for the most part, peaked at the end of the third quarter in 2018, the German DAX hit its high point just over a year ago. Like the S&P 500, it fell sharply at the end of January last year as fears of a break-out in US inflation helped trigger a surge in volatility. This contributed to a disorderly rout in global equity markets. But whereas US indices went on to make fresh record highs, the DAX was unable to maintain its upward momentum and declined sharply in June. By August three key moving averages confirmed a change in trend when first the 50-day, and then the 100 broke below the 200-day exponential moving average (EMA) giving the bearish set-up that is still in evidence. The index also made a succession of lower highs and lower lows. Even the rally since late December has so far failed to top the previous high in November. Once again, this is another bearish signal. Now we can see the DAX failing to pierce resistance at the 100-day EMA around 11,350 while testing support offered up by the 50-day EMA at 11,100.
 
Weak data
 
The German economy has been hit hard by the slowdown in China, as Germany is a big exporter of high-tech manufacturing equipment. Obviously, the ongoing US-Chinese trade dispute isn’t helping. Recent German data releases have been dismal. Over the last few days alone we’ve seen disappointing numbers on Services PMI, Factory Orders and Industrial Production. The fear is that Europe’s economic powerhouse will join Italy in announcing that it is in a technical recession. That would be confirmed next week if fourth quarter GDP contracts again.
 
US-China trade dispute
 
The DAX should get a boost if the US and China manage to resolve their differences over trade before the 1st March. US Treasury Secretary Steve Mnuchin is due to lead a delegation to China next week to resume trade talks, while claiming that recent conversations have proved “very productive.” But there’s also a danger that any face-saving agreement will prove insubstantial given President Trump's demands. His insistence that China enforces US intellectual property rights, ends forced technology transfers and brings an end to cyber-hacking and unfair trade practices is probably far too much for Chinese policymakers to agree to at this stage of the country’s development. But anything is possible, and positive news stories could trigger sharp stock market rallies.
 
Daily DAX chart

 
”german  
 
Any information, analysis, opinion, commentary or research-based material on this page is for information purposes only and is not, in any circumstances, intended to be an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any person acting on it does so entirely at their own risk and GKFX accepts no responsibility for any adverse trading decisions. You should seek independent advice if you do not understand the associated risks.
 

Share

Author's Other Opinion & Analysis

Show More Daily Reports

Related Daily Reports

Lorem ipsum dolor sit amet, consectetur adipiscing elit. In.

Sentiment

Open a Demo Account Open A Live Account

Losses can exceed deposits

RISK WARNING

The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice.

If such information is acted upon by you then this should be solely at your discretion and GKFX will not be held accountable in any way.

  • ForexF
  • IndicesI
  • CommoditiesC
        Back

        Login to Market Insight Account

        Your Market Insight account gives you access to the tools that we offer our customers including our
        Technical Studies & Sentiment for your accounts.

        Forgot Password?

        Don't you have a Market Insight account? With a few easy steps you can easily register to Market Insight

        Create a Market Insight's Account

        Your Market Insight account gives you access to the tools that we offer our customers including our Technical Studies & Sentiment for your accounts.

        register_ty

        Thank you!

        Welcome to Market Insight family!

        You have succesfully completed the registration.
        We will send you an e-mail to give you some
        instructions and our Terms and Conditions!
        Our account representatives will be contacting you as
        soon as possible. If you have any further questions
        please do not hesitate to mail us via info@marketinsight.com