Dax Closes In On All Time High

Dax to break through 13640 amid increased risk appetite?


Risk appetite has returned to the markets. German stocks advanced on Thursday as coronavirus fears eased, US data pointed to a strengthening US economy and China announced that it would slash tariffs on US imports by 50% in order to comply with the recently signed first phase trade deal.

Deutsche Bank hits 14 month high
Deutsche Bank shares surged 9% to a 14-month high in early trade after a major US asset manager brought up a chunk of the bank. LA based Capital Group, which has £1.3 trillion of client’s funds under management has built up a 3.1% stake just a day after Deutsche Bank reported full year results. This is a serious vote of confidence in the bank as it heads into a sweeping transformation process, which will see it focus on more traditional commercial banking as well as cut 18,000 jobs in a bid to halt the long-term share price decline.

Dismal factory orders ignored
Investors shrugged off disappointing German data which showed that the slump in manufacturing was far from over. Factory orders in Europe’s largest economy unexpectedly fell -2.1% month on month in December, well short of the -0.7% growth that was forecast. On a yearly basis new orders slid -8.7% against a 6% fall in November. Orders are considered a key gauge as that they indicate future output.

Whilst there have been tentative signs of the slump bottoming out, today’s data certainly doesn’t support that. The fact is there are still key risks to consider; China’s coronavirus disrupting global trade, Trump aiming tariffs on European imports and growing pressure to address climate change in business planning. 

Levels to watch
Traders weren’t prepared to let those concerns knock the Dax off its stride. The German index is up 0.6%. After breaking above its 50 sma yesterday, the bulls are in control and a fresh all-time high could be struck sooner rather than later.

Immediate resistance at 13606, today’s high, a breakthrough here could see the Dax test 13595 (high 24th Jan) before 13640 (all time high).
On the downside, today’s low of 13536 offers immediate support, prior to 13288 (50 sma) and on to 13131 (4th Feb low).

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.