DAX
The DAX index is set to rally today as investors focus on Bayer and Volkswagen, two of the biggest constituent companies. The index has jumped by 0.30% in the futures market, outperforming the FTSE 100 that has gained just 0.10% and the CAC 40 that has dropped by more than 1.20%. Futures tied to the DAX are trading at €12,902.
The biggest stories in the DAX index will be about Bayer and Volkswagen. In a statement overnight, Bayer agreed to pay $1.6 billion to settle claims that its birth control device, Essure, had serious implications to women. The company was sued by more than 38,000 women who used the device. The company stopped selling the device in 2018 after the complains started to emerge. It did not admit any liability.
Bayer has been in the news recently because of its litigations about Roundup, a drug that was manufactured by Monsanto, which it bought a few years ago. It reached a $10 billion settlement a few months ago. Ironically, the company had bought Conceptus, the company that developed Essure in 2013 for $1.1 billion.
Volkswagen will also be a major mover in the DAX index today. That is after the company won a civil fraud case against the SEC in the United States. The suit related to the emission scandal that dented the company’s image. According to the WSJ, the SEC claimed that the company sold more than $13 billion in debt at a time when the management knew that it had sold 500,000 cars with defective carbon control equipment.
Futures tied to the DAX index are trading at €12,902. On the daily chart, the index has been consolidating around this price in the past few weeks. Also, the price is above the 50-day and 100-day exponential moving averages. It is also above the ascending trend line that is shown in black below. Therefore, I suspect that the price will continue rising today as bears attempt to test the important psychological level of €12,950.
On the flip side, a move below €12,800 will invalidate this trend. This price is its lowest level on Wednesday and is also along the ascending black trend line.
