DAX eases from record highs, inflation, COVID cases rise

PPI jumped to 18.4% in October & COVID cases increased by a record 65,000 over the past 24 hours raising concerns of a winter lockdown.


Lockdown & COVID in focus

Austria announced its fourth lockdown as COVID cases surge. The picture in Germany is also going from bad to worse.

COVID cases are rising, deaths are also picking up sharply and given the ongoing change of power in the Eurozone’s largest economy, authorities have been slow to respond.

With cases climbing and hospitals being overwhelmed in some areas, outgoing Chancellor Angela Merkel, along with regional leaders have decided to restrict access to the unvaccinated to restaurants, bars and events in the areas where cases are surging.

Germany reported a record 65,000 cases on Thursday. Germany has less than 70% of the population vaccinated, less than in other European countries. The outlook for the winter months is darkening.

Separately, German’s PPI data revealed that inflation at the factory gate surged 18.4%, up from 14.2% in September. The PPI is often considered a lead indicator for consumer prices given that firms will need to pass on at least some of that increase. Germany’s CPI was 4.5% in October an almost 30 year high. The PPI suggests this could still have further to rise. Even so, the ECB continue with their dovish verse.

Surging prices and COVID cases means the clouds are gathering over Germany and its economic recovery, although the weaker Euro is offering some support..

Learn more about the DAX

Where next for the DAX?

The DAX has been extending its recovery from 14812 the October 6 low, running into resistance at 16300 a new all-time high.

From reaching the all time high, the DAX is easing lower, bringing the RSI out of overbought territory.

Immediate support can be seen at 16125 the rising trendline. A move below here could see 16000 round number and August high tested. It would take a move below this level to negate the near term uptrend and expose the 50 and 100 sma at 15650.

Buyers will look for a move above 16300 to bring 16450 the rising trendline dating back to April and fresh all time highs.

DAX chart  

How to trade with City Index

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade.


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.