DAX index
Germany stocks are wavering today as concerns over coronavirus remain. The DAX index is down by 0.33% and trading at €12,570, which is slightly higher than yesterday’s low of €12,440. Other European equities are also falling, with CAC 40 and Stoxx 50 falling by 0.50%. The FTSE 100 index is a key outlier having risen by 0.15%.
The biggest concern for Germany stocks is that the number of covid cases in several European countries has continued to rise. Just yesterday, the UK reported more than 6,000 new cases and government leaders predict that the number will continue rising. Spain, on the other hand, reported more than 11,000 cases while Italy has confirmed slightly below 2,000 cases.
A second wave of the virus is a negative factor for German stocks and the DAX index. That is because many Germany firms do a lot of business in Europe. This includes automakers like Daimler and chemical giants like BASF and Bayer.
The DAX index is also rising because of the relatively strong euro. The euro is trading at 1.1670 against the dollar. This is slightly higher than this week’s low of 1.1610. A stronger euro is usually negative for DAX because most of the constituent firms report their earnings in euros.
Most companies in the DAX are in the green today. The best-performers are E.ON, Deutsche Bank, Covestro, and Beiersdorf, which are up by more than 0.50%. On the other hand, the worst-performers are Volkswagen, Infineon, Siemens, and SAP that are also down by more than 0.70%.
The daily chart shows that the DAX index has been moving sideways in the past few days. It is trading at €12,570. This price is below the blue ascending trendline and below the 50-day and 25-day exponential moving averages. It is also forming what seems to be a bearish pennant pattern that is shown in green. Therefore, I suspect that the index will end the day at this range and possibly continue moving lower in the coming week.
On the flip side, a move above the psychological resistance level of €13,000 will invalidate this trend. This price is also at the intersection of this trendline and the lowest level on 21st September.
