Dax index fell in early trading mirroring Asian stocks on headlines China is planning to impose a new security low on Hong Kong. Chinese administration plans to introduce a national law that bans treason, secession, sedition and subversion of the central government in China. The move might spark a new round of pro-democracy protests and a stand-off that we saw last year.
Risk-off sentiment also supported by the move from US Senate to vote a bill that could potentially ban some Chinese companies from listing on American stock exchanges such as Baidu and Alibaba. Retaliation from China can’t be ruled out that will further escalate the tension between the two superpowers.
The German Finance Ministry announced earlier today that the tax revenues of the German government and the federal states fell by 25.3% in April from the previous year to around 39 billion euros.
Dax index dragged down by MTU Aero Engines AG -2.04% at 129.95, SAP -1.91% at 104.74, adidas -1.57% at 213.30 and BASF -0.93% at 45.13.
Dax index is 0.81% lower at 10,975 as the index correction from two-month highs continues for the second consecutive day. Now the outlook remains positive for the short term as long as the Dax index trades above the 50-day moving average. The long term technical outlook remains bearish as long as the index trades below the 100-day moving average.
On the downside, initial support for the Dax index stands at 10,867 the daily low. In case the Dax breaks below, then the next support is at 10,675 the low from May 18. Below 10,675 the next support area will be met at 10,191 the 50-day moving average.
On the other hand, first resistance for the index stands at 11,006 the daily top. A move above 11,006 would target yesterday’s high at 11,195. A break higher might challenge 11,239 the high from May 20.