The DAX index rose today even as automakers warned about financial results this year. In a statement yesterday, BMW said that the fallout from the pandemic would disrupt production this year. The company said this after automakers held a virtual meeting with Angela Merkel.
In the meeting, automakers like Daimler, BMW, Audi, and Volkswagen asked the government to support them in this tough period. The companies have suggested stimulus packages like cash-for-clunker, program, which rewards shoppers who buy low emission vehicles. In a statement, Angela Merkel said that his administration would form a taskforce between the government and the companies. Their results will be presented in June.
Volkswagen also warned about profitability
The announcement by BMW came a day after Volkswagen warned about profitability. The company said many parts manufacturers were passing costs to the company because they are operating below capacity.
German automakers are not the only ones in trouble. In the United States, companies like General Motors and Ford have warned about the impact of the disease. Similarly, other European companies like Renault and Peugeot have reported losses.
The DAX index is also reacting to the ongoing struggles at Wirecard, the payment giant. In a statement yesterday, Union Investment, a key shareholder asked the board to end the “whitewash”. The fund also told the company that “the time of excuses is over.” The statement came a week after Chris Horn, another key shareholder, asked the company to hire another CEO. Deka Investment, another shareholder has asked the company to rethink its strategy.
The DAX index also rose even as data warned that factory orders in Germany fell by a record 15.6% in March.
Download our Q2 Market Global Market Outlook
DAX Index technical outlook
On the daily chart, we see that the DAX index is attempting to recover after the sharp decline that happened last week. The price is trying to test the 50-day EMA, which is slightly below the 50% Fibonacci retracement level of €10,888. A move above this level will mean thar bulls are in control. As such, they will attempt to move past the April high and 100-day EMA at €11,367.
On the other hand, a move below €10,195 will invalidate this prediction. This price is along the 38.2% Fibonacci retracement level. It is along the two supports shown in green below. This action will mean that there are still sellers in the market.