DAX Index Edges Lower on Risk-Aversion, Support at December Low

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Written By: Alejandro Zambrano
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    Summary:
  • The DAX index is lower today by 0.16% as worries about the coronavirus persists. The next important support level is the December low.

The DAX index is lower today by 0.16% with SAP and Infineon being the biggest losers, down by -3.76% and 3.21%, respectively, while Deutsche Telekom AG is today’s current leader and up by 2.15%.

Today’s decline in the DAX index is a continuation of yesterday’s slide on the Coronavirus panic that has dominated the headlines in the last few days. The news out of China this morning showed that many more people have now been confirmed to carry the disease.

As of three hours ago, a total of 4400 people had the virus, a jump from 2700, and 62% higher than yesterday. The World Health Organization is still to sound the alarm. Hong Kong, on the other hand, is taking action and will close transportation links with Mainland China starting from Thursday. Scientists at the University of Hong Kong said that almost 26,000 people in Wuhan are showing symptoms of the coronavirus, and another 44,000 probably carry the disease without showing any signs of it.  The coronavirus will lead to less economic activity in China and could hit DAX firms, as 7.1% of German exports are to China, amounting to total sales of $109.9 billion in 2018.

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Later today, US durable goods orders will be out, and also US consumer confidence, but it is unlikely that these two reports will be able to change the mood amongst investors. Tomorrow, the Federal Reserve has anticipated keep rates unchanged.

The technical analysis outlook for the DAX index remains downwards, and the index might find support it reaches the 12872 to 13017 interval. The 12872 level is the December 2019 low. The short-term trend will remain downwards as long as the DAX index trades below the 2020 high of 13643.7.

Written By: Alejandro Zambrano

Alejandro Zambrano combines extensive professional experience and a pragmatic attitude to trading, building clients’ understanding of the markets and the rationale behind investing. Zambrano was the Chief Market Strategist of the FCA regulated broker, Amana Capital. Prior to that, he was also the Head Analyst at FXCM’s London research desk. Interact with Alex via Twitter at @AlexFX00.

Published by
Written By: Alejandro Zambrano