DAX Index Remains Bearish on Coronavirus Spread, US GDP On Deck
At the time of writing, the DAX index is down by 1.17% on the day as investors continue to send prices lower on the latest twist in the Coronavirus spread. Lufthansa is the biggest loser, and at the time of writing, their share price was down by 6.56% as the virus disrupts their operations.
Coronavirus in Italy
Several north Italian villages are under lockdown following the spread of the virus, and yesterday it looked like the growth rate of Italian cases would remain around 17%. However, before the day was over, the number had increased by 41% on the day. Later on the same day, President Trump assured that the US would be ok. However, that did not calm the markets.
The DAX index slumped on the news, alongside many other markets, as the most significant risk of the coronavirus is not the risk of death, instead of risks to the economy as people stay at home instead of producing and consuming. And if people are not allowed to go back to work, there is a risk that companies could go bust.
The very short-term trend in the index remains downwards below yesterday’s high of 12866.8, and as long as the price trades below this level, the DAX index might be able to test yesterday’s low of 12335, followed by the October 11 low of 12158. However, the price is also trading below its 200-day moving average, which is still pointing upwards, and the price is oversold per RSI-20. Thus the price is ripe for some bullish reaction. Yet as long as the price trades below yesterday’s low, the trend will remain downwards, and short-term traders will probably remain bearish.
Later in the day, US 4Q GDP figures will be out. Economists project GDP to have increased by 2.1% annualized, yet as this data is not forward-looking, it might not grab attention from investors.More content