S&P 500
The DAX index is down by more than 30 basis points and is trading at €12,540, which is below this week’s high of €12,847. Other indices in Europe are also in the red, with CAC 40, and FTSE 100 down by more than 0.43% and 0.45% respectively.
There are three main reasons why the DAX index and other European indices are falling. In fact, we can add Asian indices were in a deeper red today. In China, the Shanghai composite declined by 1.95% while in Hong Kong, the Hang Seng index was down by more than 2%. There are four main reasons why the DAX index and these other indices are falling today.
First, the number of coronavirus cases in the United States and other countries is rising. Data released yesterday showed that the US confirmed more than 57,000 new cases. That was a slight decline from the previous day’s 62,000. The same trend is happening in other countries like South Africa, Australia and Hong Kong. Indeed, Hong Kong, which had started to reopen ordered all schools closed.
Second, the DAX index declined because of the upcoming earnings season. Starting from next week, hundreds of companies in the United States, Germany, and other European countries will start reporting. Analysts expect that the quarter will be terrible, with most companies reporting large quarters.
Third, the DAX is falling because of the rising tensions between the United States and China. In a statement, the Trump administration announced new sanctions against Chen Quanguo, a senior official of the Chinese government. In a statement, China rebuked the US for interfering in internal matters. The DAX index is reacting because tensions between the two powerful countries are not good for its companies.
Finally, the DAX index is falling because of a new “unknown pneumonia” that is more deadly than coronavirus. The disease has reportedly killed more than 1,700 people in Kazakhstan, according to the Chinese embassy in the country.
Most DAX index constituents are in the red today. Among the best performers are Infenion, Heidelbergcement, MTU Aero, Fresenius, and Vonovia. These shares have jumped by more than 0.45%. On the other hand, the worst performers are Lufthansa, Daimler, Merck, Deutche Post, and Continental. These firms have dropped by more than 1%.
The DAX index is trading at 12,477, which is below Monday’s high of 12,840. On the daily chart, the price is above the 50-day and 100-day exponential moving averages. Also, it is slightly higher than the ascending black trend line. This means that the bullish trend is likely to continue so long as the price remains above this line.
On the other hand, a move below 12,385 will invalidate this trend. This price is along the ascending trend line shown in black.