- Summary:
- The DAX index is in a tight range as investors reflect on the US corporate earnings and the WTO ruling on US support for Boeing.
Table of Contents
The DAX index is down by about 0.12% as investors brace for confrontation between the US and Europe. The index is trading at €13,025, which is in the same range it has been for the past few days.
US-EU confrontation after WTO ruling
German stocks are reacting to a ruling delivered by the World Trade Organisation (WTO) about subsidies the government offers to Boeing. In its ruling, the organisation said that the EU can now place tariffs worth €4 billion. The bloc filed complaints with the WTO after the body ruled in favour of the US last year about subsidies to Airbus.
Analysts believe that the EU will not be quick to levy the tariffs to the US. Instead, they have proposed new talks aimed at solving the issues. Still, the members will wait for the results of the upcoming American election. If the incumbent wins, it will increase the probability of a new trade war. On the other hand, Joe Biden is likely to seek a deal with the EU.
A conflict between the EU and the US would have a major impact on the DAX index because of the volume of trade between the two sides.
Earnings and Covid vaccine
The DAX is also falling because of the ongoing earning season and the evasive Covid-19 vaccine. Yesterday, American companies like JP Morgan, Citigroup, and Blackrock released impressive results. They achieved this by reducing the amount of money they have set aside for bad debt. Still, they warned that the US economy remains in shaky grounds.
Today, other banks like Wells Fargo and Goldman Sachs will release their earnings. In response to the earnings, Deutsche Bank, the only bank in the DAX index has gained by about 0.35%.
The DAX is also reacting to the evasive Covid-19 vaccine and antigen. While progress is still being made, companies like Johnson & Johnson and Eli Lilly have hit some roadblocks.
DAX top movers
Henkel, Deutsche Post, Infineon, and Siemens are among the best-performing stocks in the DAX today. They are all up by more than 0.80%. On the other hand, MTU Aero, which is the worst-performing DAX stock this year, is down by 1.50%. Linde, Deutsche Post, and Munich Re are the worst performers.
DAX index technical outlook
The daily chart below shows that the DAX index has been in a tight range recently. It remains above the 25-day exponential moving averages. Also, it has formed an ascending triangle pattern. The support of the triangle connects the lowest levels in June, September, and October. The resistance, on the other hand, connects the highest levels in July and September. Therefore, in the near term, I suspect that the price will remain in this range since the triangle is not yet close to the convergence zone.
DAX index technical chart
