- Summary:
- DAX index rose today, propelled by Deutsche bank whose shares jumped. The main laggards were Merck and Siemens which is spinning off its energy business
German stocks rose today as investors blushed-off emerging risks in Asia. The blue-chip DAX index rose by more than 40 basis points, continuing a recent upward trend that started on Friday.
Deutsche Bank share price soars
The biggest gainer today was Deutsche Bank, the embattled German lender. The bank’s shares rose by more than 3 per cent as investors reacted to a positive statement by Christian Sewing. In a statement yesterday, he said that momentum in the trading segment (Fixed Income Commodities and Currencies) of the business continued in May. In the last quarter, the segment helped cushion the bank from a high cost of non-performing loans.
Deutsche bank shares are trading at €7.77.
Investors follow the FICC segment closely because it tends to bring more profits to banks. This segment tends to do well in times of increased volatility.
Other companies that soared are Lufthansa, Daimler, BMW, Wirecard, and Continental. Automakers rose today because investors expect a bailout by the German government after it agreed to provide financing to Lufthansa. At the same time, a decision by France to bailout its automakers increased the probability that Germany will follow suit.
Merck shares sink
Among the biggest losers in the DAX index were Merck, Infineon, Fresenius, and Siemens. These companies all made headlines.
Merck, whose shares jumped yesterday, declined by more than 40 basis points in reaction to an interview its CEO made with the Financial Times. In the interview, he said that it was unreasonable to expect a coronavirus vaccine in the next few months as most companies had promised. He talked with the FT shortly after the company announced that it was developing two vaccines.
Merck shares are trading at €77
Siemens shares declined today after the company said that it was offloading its energy business. In the announcement, the company said that 55% of the energy business would be spun to Siemens shareholders.
Siemens shares are trading at €98.25
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DAX index technical outlook
The DAX index is trading at €11,530, which is significantly higher than the March low of €7977. On the daily chart, the price is above the 50-day and 100-day exponential moving average. It is also slightly below the important resistance of €11,593. Therefore, the bullish trend will continue so long as the price remains above the 50% retracement of €10,888.
A move below €10,888, will mean that there are still more sellers in the market, who will be keen to push the price to the May 14th low of €10,200.