DAX Index Recovers On Stronger Manufacturing PMI, PBOC Intervention
Dax index started the session higher after the PBOC stimulus. Stocks in China were under heavy selling pressure as the coronavirus spread increased worries for a global recession. The central bank of China cut the repo rates by 10 basis points and injected $173.8 billion of liquidity. Above that the regulator banned also the stocks short-selling in a move to curb the negative implications.
World Health Organization (WHO) declared a global emergency as the coronavirus spread to 24 countries. Meanwhile, the Philippines reported the first coronavirus death case. Now there are more than 17,300 confirmed coronavirus cases worldwide, and the death toll has reached 362.
Dax gets a hand as the Germany Manufacturing PMI came in at 45.3 topping forecasts of 45.2 in January. Investors will closely watch the January U.S. ISM manufacturing sector activity data for fresh clues on the fundamental front.
Dax index is 0.14% higher at 12999 as traders cautiously return to risky assets. The outlook for the Dax index is neutral now as the recent sharp correction has cancelled the bullish momentum. The previous week Dax broke below the 50-day moving average and selling pressure accelerated amid the coronavirus outbreak.
On the upside, immediate resistance for the Dax stands at 13,052 today’s high. Next resistance will be met at 13200 the high from January 31st. If bulls surpass that level the next obstacle would be the high from January 29th at 13374.
If Dax continues the correction, the first support will be me at 12987 the daily low. A close below might refuel the downward trend for the next critical support at 12954 the 100-day moving average. Next level stands at the 200-day moving average around 12530.