DAX
The DAX index is up 2.8% on the day after a Monday announcement from the German Finance Minister indicated that Lufthansa Airlines had secured a €9 billion bailout package from the German government.
According to German Finance Minister Olaf Scholz, the rescue package for Lufthansa Airlines has been structured to allow the German government sell off its newly acquired stake “as early as possible, ideally with a profit.” Scholz also said that the terms of the deal would ensure benefits to the company and German taxpayers.
The shutdown in international air traffic as part of efforts to contain the coronavirus global pandemic has led to a 95% fall in passenger traffic, leaving the aviation industry in dire straits with airlines all over the world teetering on the edge of bankruptcy. The bailout of Lufthansa follows calls to save the iconic airline from collapse.
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The market reaction to the news has predictably been very positive, with the German DAX 30 index surging 317 points on the day to 11,391.28 points. The daily candle’s high is also the same as the closing price (as at the time of writing), indicating strong demand on the DAX.
Continuation of the price advance would allow the DAX to target the low price of 26 March 2018 at 11,713.07. This price level is also where highs of 11 March 2019 and lows of 24 February 2020 are seen. Above this level, we may see further resistance at 11995.83 and possibly at 12432.83. The highs of 16 April 2018, 9 July 2018 and 1 July 2019 form another resistance at 12626.62.
On the flip side, a retreat could send the DAX back to the 11044.72 price level, with the 10839.07 and 10376.37 price levels coming into focus as possible support areas following any further declines.
With the latest price advance, the DAX continues its search to regain the highs seen before the coronavirus-induced selloff.