Dax index trades higher for the fourth consecutive session taking their cue from a strong performance from Wall Street and Nikkei 225. Stocks ignore the contraction of the U.S. economy by 4.8% in the first quarter of 2020 and focus on the coronavirus fight news. Gilead’s drug, remdesivir, showed some positive data in the treatment of the coronavirus patients in the initial phase of clinical trials. Any positive headline that point to a faster reopening of the economies around the globe is a bullish signal for risky assets. Rumours that social distancing will be extended until May 10 in Germany weighs on sentiment.
On the economic news, the German Retail Sales plunge 5.6% in March better than expectations of -7.3%. The February reading was at +1.2%, but March was a coronavirus month. The yearly reading came in at -2.8% below the expectations of 1.5%.
Investors await the ECB decision later today, with expectations to keep rates unchanged and increase in the bond-buying program.
Earlier today, France reported a contraction of 5.8% in its GDP in the first quarter of 2020, below the expectations of -4%. The Yearly GDP reading shrank by 5.4%, also below the forecasts of -3.6%. Meanwhile, Moody’s Investor Service, forecasts that Italy’s GDP will contract by 9.3% in the full year 2020, and will grow by 6.1% in 2021.
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Dax Index Technical Evaluation
Dax index is 0.20% lower today at 11,085, keeping the positive momentum that has formed since the index breached the 50-day moving average. Dax index is 34% higher since the March lows amid the coronavirus sell-off. The technical picture is positive for the short term, but the longer-term remains bearish as long as the index trades below the 100-day moving average.
On the technical side, the first resistance for the Dax stands at 11,235 the daily top. A move above 11.235 would target the high from March 6, at 11,768. A move higher might challenge 12,007 the 100-day moving average.
On the flip side, immediate support for Dax index stands at 11,079 the daily low. In case the sellers persist, the next support is at 10,810 the low from yesterday’s trading session. Below 10,810 the next support will be met at 10,647 the 50-day moving average.
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