DAX Index
The DAX index jumped by more than 1 per cent as the market reacted to improving sentiment in the market. German stocks mostly because many countries are reopening and because of optimism about the vaccine being developed by Moderna.
Deutsche Bank was the best-performing stock in the DAX index as the stock rose by more than 3 per cent. The catalyst for this move was the decision by Angela Merkel and Emmanuel Macron to approve a 600-billion-euro fund that will support companies in the region. The bank also rose after the management completed an internal merger of its private and business clients. This is an important process as the bank accelerates its restructuring process.
The second best-performing stock in the DAX index was Wirecard, the embattled payment processor. The stock jumped by more than 1.35 per cent as the market appeared to look past its current crisis. Many analysts believe that the stock is undervalued due to its depressed share price. Also, it emerged that the accountancy watchdog in Germany initiated a probe into the company last year. BaFin, the German financial watchdog is also investigating the company.
Other top gainers in the DAX index were Allianz, Lufthansa, BMW, and Daimler. The automakers are gaining because it appears that demand for cars is rising particularly in China. On the other hand, Lufthansa, like Cathay Pacific, is hoping that the vaccine announced yesterday will stir international travel.
Deutsche Telkom stock also rose after Softbank announced it was considering selling its stake in US carrier, T-Mobile. The asset sale will be worth more than $20 billion. As the biggest shareholder in T-Mobile, Deutsche Telekom may be involved in the transaction.
The biggest losers in the DAX were Muench Ruckvers, Merck, and Deutsche Boerse.
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An interesting picture emerges when you look at the DAX index daily chart. We see that the index has managed to move above the 50% Fibonacci retracement level. Also, it has moved above the Ichimoku cloud and above the 50-day exponential moving averages. It is also slightly below the 100-day EMA. Therefore, I expect the bulls to feel vindicated, which will see them attempt to test the 61.8% Fibonacci retracement level at 11,688.
On the flip side, a move below 10,200 will invalidate this trend. This price is along the important swing low on 14th May and slightly above the lower side of the Ichimoku cloud.