DAX 30 Index, German National Lockdown, Mobility Data, Covid-19 – Talking Points:
- Australia ASX 200 The index skyrocketed during APAC trading after the RBA cut interest rates and launched a $ 100 billion bond purchase program.
- The imposition of a national foreclosure in Germany could weigh on regional assets sensitive to short-term risk.
- Germany’s benchmark DAX 30 The index may suffer further losses after falling below key chart support.
Equity markets continued to advance during Asia-Pacific trading as market sentiment appeared to strengthen throughout the session.
Australia’s ASX 200 index rose 1.9% as the local currency slipped lower against its major counterparts, after the Reserve Bank of Australia cut the official treasury rate by 15 basis points and launched a $ 100 billion bond purchase program.
Looking ahead, US factory orders for September and Mexico’s October manufacturing PMI update are making headlines in the economic papers.
German lock on the Cap DAX 30 index
The imposition of a national lockdown for one month in Germany, may continue to pressure the benchmark DAX 30, with local authorities keeping the door open to extending current restrictions if outbreaks are not successfully quelled.
Finance Minister Olaf Scholz said that “as long as the number does not decrease there will always be restrictions”, while Chancellor Angela Merkel warned that “the light at the end of the tunnel is still far enough”.
Further, Merkel implored residents “to refrain from any travel that is not really necessary, from any celebration that is not really necessary. [and] please stay home – wherever you are, if possible ”.
Source – Worldometer
The restrictions are expected to cause German economic output to contract in the fourth quarter of 2020 and will likely exacerbate the recent weakness seen in regional fundamentals.
Retail sales unexpectedly fell 2.2% in September, while the ZEW Economic Sentiment Index fell to its lowest levels since May last month.
Indeed, the impact of the enhanced measures is reflected in high-frequency mobility data, as the number of German drivers and marches falls below the pre-coronavirus pandemic benchmark for the first time since mid -June.
Therefore, local health developments could continue to dictate short-term price action, with a sustained surge in infections increasing the likelihood that foreclosure measures will be extended and, in turn, updating the benchmark DAX 30.
Source – Apple Mobility data
DAX 30 Index Daily Chart – Psychological Resistance May Top Up
From a technical standpoint, the DAX 30 index looks set to bounce back towards the neckline of the head and shoulder model that collapsed in late October, after forming an inverted hammer candle. bullish just above key April support high (11,340.1).
However, with the RSI and MACD indicators moving firmly below their respective neutral midpoints, the path of least resistance remains skewed downward.
Nonetheless, a daily close above the sentiment defining 200 day moving average (12,067.3) would likely generate a push to test the resistance range at 12210-12300, with a burst above needed to chart a path towards annual opening (13,126.5).
Conversely, further losses could be on the horizon if psychological resistance at the 12,000 mark holds, with a daily close below the April high (11,340.1) needed to bring the level into play. 11000.
DAX 30 Index Daily Chart Created Using TradingView
– Written by Daniel Moss, Analyst for DailyFX
Follow me on twitter @DanielGMoss
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