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DAX Index Opens Near Record-Highs on Trade Deal and Brexit Hopes

The DAX index is trading in the green at the start of today’s trading session. Germany’s blue-chip stock index is up roughly 174.68 points or 1.32% at 13,396.32 as risk appetite dominate investor sentiment.

US-China Trade Deal Happening Soon?

First, US President Donald Trump initially sparked the rally in US equities last night. He tweeted that both the US and China desperately want a trade deal signed soon. People close to the negotiations say that we could hear an agreement announced today. Market participants have their expectations up that the US will roll back existing tariffs. On top of that, the additional levies which are due to be implemented on Sunday, will not push through. Meanwhile, China has been reported to agree that they will buy up to 50 billion dollars of agricultural products from the United States.

Conservatives Win UK General Elections

Second, the DAX index is tracking higher on the results of the UK general elections. Prime Minister Boris Johnson and the Conservatives party have secured a majority win. This news has helped boost risk appetite because it reduces the risk of a Brexit plan not being passed in parliament. Now all eyes will be on Prime Minister Johnson as he pushes for a deal. European Council President Charles Michel has welcomed the news and said that they will work on crafting an exit plan for the UK from the European Union.

Bundesbank Revise Growth Forecasts

Earlier today, Germany’s central bank downwardly-revised its growth forecasts for the country. For 2019, GDP is seen to be at 0.5% after initially being estimated at 0.6%. Growth for 2020 has been slashed in half to 0.6% from 1.2%. Meanwhile, the GDP for 2021 was revised higher to 1.4% from 1.3%.

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DAX Index Outlook

On the weekly chart of DAX index CFD, we can see that the stock index is currently testing resistance at its October 29, 2017 and January 21, 2018 highs. A bullish close above 13,557.1 could mean that the DAX may soon trade to new historic highs.

On the other hand, if resistance at the previous highs hold and sellers dominate today’s trading, the stock index could track lower. Support around 12,171.3 could be re-tested. This price coincides perfectly with the rising trend line from connecting the higher lows of December 23, 2018 and August 11, 2019. On top of that, it seems to align nicely with the 200 SMA.