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Germany and Dax


Philip Miller
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Hi Philip, thank you for your question. Germany finds itself in a similar situation to other big Western European countries. The death toll is failing and the economy is gradually reopening. This sentiment is also reflected in the DAX Index, which made solid gains in the past week.

 

However, please note that the German media reported over the weekend that the COVID-19 spread accelerated in the past few days as a result of the loosened lockdown measures. Hence, be careful with playing the DAX index on the long side as Germany may not be out of the woods just yet.


 

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Hi Phillip, thanks for coming here.

The German blue-chip stock market index DAX fell on Monday due to several factors including profit-taking, weak industrial results as well as poor trade figures from China.

The index lost 0.22% to 12,819 points. However, in spite of declining the overall outlook for DAX still looks promising. DAX advanced over 10% since the beginning of June and it’s currently above the 200-DMA of 12,128 points. 

In addition, recent US labour market reports boosted the index as there’s a significant increase in employment rate since May. The unemployment levels dropped unexpectedly, giving the reason for optimism regarding economic prospects.

However, the industrial production rate in Germany was lower-than-expected in April, doubling the contraction recorded in the month before. Still, analysts believe the production rate will recover from now on but for that to happen, the second wave of COVID-19 must be prevented, said economics company Capital Economics.

"However, even with the government's latest fiscal stimulus, domestic demand will probably remain sluggish and external demand will be even weaker given that the rest of Europe will be even slower to get back on its feet", said Andrew Kenningham, Chief Europe Economist.

The top performer among DAX components was the stock of airspace giant Deutsche Lufthansa, which was fueled by the announcement that it will start gradually accelerating its operations from June 15. Shares of Lufthansa advanced nearly 8%.  

Even though there are almost no reverse signals in DAX, the index is now at its key threshold level. This is the same lower limit DAX was before the coronavirus collapse. In order to reach its record highs once again, the index would have to break above this threshold. 
 

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Hi Phillip,

The DAX index jumped today as investors wait for the recovery fund meeting in Brussels. DAX is currently trading at 12,907 euros, with the automobile sector being the top performer in DAX. This price is currently above the ascending trend line and the 50-day and 100-day exponential moving averages. If DAX remains above this level, it will probably keep rising. 

Shares of Daimler, the Mercedes Benz manufacturer, surged over 3.6%. Other good-performing carmakers include Volkswagen, Continental (supplier), and BMW, all of them up over 2%. 

Carmaker stocks advanced because of the Daimler’s statement from yesterday, where the company announced that it will report a 1.68-billion-euro loss in the second quarter, one of the largest losses in the history of the company. Daimler blames the coronavirus epidemic for the losses as many of its customers decided not to buy its cars during that period. 
 

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Hello Philip,

The German blue-chip stock index dropped 0.60% because of extended European recovery fund discussions. DAX is currently trading at €12,844, down from last week’s high of €12,966. Other European indexes including the CAC 40, FTSE 100, and Stoxx 50 also declined by 0.80%, 0.90%, and 0.75% respectively.

DAX index was mostly affected by the disagreements in Europe regarding the €750 billion recovery fund that was proposed two months ago. The disagreements are mostly about the size and structure of the fund.

European Commission submitted a proposal in May, suggesting a €750 billion fund to boost the recovery process of the region. The largest part of the fund would be provided to all member states depending on the level of the crisis they’re in. Therefore, EU countries such as Italy, Spain, and France would probably get the largest part of the fund.
 

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