DAX index CFDs pared back earlier losses even as investors remain concerned about the state of the economy. The disease has continued to spread around the world and the number of confirmed infections stand at almost a million. This has led to many parts of Europe, Asia, and America to order residents to stay at home. Meanwhile, according to a report by Bloomberg, US intelligence officials say that China has been lying about its total infections and deaths.
Earlier on, DAX index CFDs had dropped by more than 2%, following the price action in the United States where the main indices fell by more than 4%.
As I have written before, Germany appears to be vulnerable because of its overreliance on the industrial sector. Take the auto industry for instance. Its biggest companies like Volkswagen and BMW have warned of tough times ahead. Indeed, Continental, one of their biggest suppliers has warned that the industry faces a miserable year. The company has also idled more than 40% of its factories in the country.
Its easy to see why. With most people staying at home and with jobs in trouble, most people will not think of discretionary spending in vehicles. Worse, the auto sector was actually slowing down even before the crisis. In March, data showed that new car registrations in the country declined by more than 7.3%. Keep in mind that 77% of cars manufactured in Germany are exported. Meanwhile, most car manufacturers have reduced the number of hours.
At the same time, Germany can survive this. The country is famous for its big budget surplus. This means that it can afford to spend money to cushion the economy.
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DAX Index Technical Analysis
The DAX index CFDs rose slightly after reaching an intraday low of €9,294. On the four-hour chart, we see that the index made a bullish hammer pattern before this turnaround. Also, we see that the index has been moving sideways in the past two trading sessions. This is happening at around the 23.6% Fibonacci Retracement level. The Fibonacci has been drawn by connecting the YTD high and last week’s low. As I explained yesterday, the index is in its fourth Elliot Wave, and I expect it to move lower in the next sessions.
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