The Dax is trading 0.8% lower heading into the afternoon around session lows. Risk sentiment has taken a hit amid growing signs of the strains that coronavirus is having, not just on the Chinese economy but the global economy.
Apple warns on profits
Apple, considered one of the best bellwethers for the coronavirus impact, warned that their profits could miss expectations owing to low production levels and slow Chinese consumption. China is a big market for Apple, accounting for around one sixth of its global revenues and the source of most of its products. With this in mind, the impact is both on supply and demand. The warning from Apple has served as a reality to check to the financial markets, which had so far been assuming that any impact from coronavirus will be short lived.
German ZEW Sentiment Index Drops
Also dampening the mood for the Dax was today’s German ZEW index for February. The Sentiment Index tanked to 8.7 from 26.6, significantly short of the 21.5 analysts forecast. Investment sentiment has dropped sharply as the effect of the coronavirus outbreak weighed on exporters, painting an increasingly gloomy picture for Europe’s largest economy.
The hit to sentiment comes following a poor run of data from Germany, with economic growth stagnating, and the manufacturing sector suffering its worst year for a decade last year, following a sharp fall in orders.
Dax levels to watch:
Despite falling over 100 points today, the DAX remains in an uptrend. A break below 13445 (Feb 10 low & 100 & 50 sma approx.) could negate the current uptrend. This could open the doors to 13320 (200 sma) and eventually 12970.
On the flip side immediate resistance can be seen at 13731 (today’s high) prior to 13795 (all time high).
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.