Dax index started lower the session mirroring Wall Street amid disappointment over a potential coronavirus vaccine from biopharma company Moderna. Some industry reports cast doubts on the trial results of the Moderna’s coronavirus vaccine that on Monday sparked enthusiasm to investors betting global economy might recover faster than expected with the help from a coronavirus vaccine.
Doubts Over Common Recovery Fund
Some complications on the French and German relief package proposal that on Monday sparked a rally on Dax, also weigh on the index today. The proposal supports the concept of the EU commission raising money on the capital markets, backed by the EU budget, boosted investors sentiment as Germany was opposed to any joint debt in the past.
Yesterday, Netherlands, Austria, Sweden and Denmark who advocate lower EU spending, expressed their doubts on common bonds and grants, under the coronavirus recovery effort. The four countries said they would come forward with their proposal soon.
On the other hand, the countries in the south, arguing that they should not be penalized with extra debt for a crisis that was not their fault. The borrowing costs for Italy, Greece, Spain and Portugal have decreased since the French and German proposal.
Dax index is 0.65% lower at 11,006 as the index gives back some of Monday’s sharp gains after yesterday the index rejected at the 11,200 level. The technical outlook remains positive for the Dax above the 50-day moving average, while the long term picture is clearly bearish below the 100-day moving average.
On the downside, first support for the Dax index stands at 10,978 the daily low. In case the Dax index breaks below, then the next support is at 10,675 the low from May 18. Below 10,675 the next support will be met at 10,167 the 50-day moving average.
On the other hand, first resistance for the Dax index stands at 11,076 the daily high. A move above 11,076 would target yesterday’s high at 11,191. A break higher might challenge 11,684 the 100-day moving average.