The DAX index is falling today as the number of Covid-19 cases in Germany and other European countries start rising. The blue-chip index of the 30 biggest German stocks is down by 0.50% and is among the worst-performing in Europe.
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The number of Covid-19 cases in Germany and other countries has been on an upward trend, which has affected sentiment among investors. Health officials confirmed more than 2,400 cases yesterday, a day after they reported more than 3,000 new cases. The same trend is happening in other European countries like Spain and Italy.
The situation has been made worse by the latest news from Johnson & Johnson, one of the leading firms developing a vaccine. In a statement overnight, the company said that it was suspending all trials for the vaccine after a subject fell ill. It did not say how long the assessment will take.
Two months ago, scientists at AstraZeneca also suspended trial of their vaccine after a subject fell ill. While other companies like Pfizer and Novavax are developing a vaccine, the current situation is not good.
The DAX index is also falling as investors wait for the financial performance of big companies in the third quarter. The earnings season will start with leading banks like Citi and Wells Fargo. These banks will publish their earnings in the afternoon session of German equities market.
Most firms in the index are in the red today. Bayer, the troubled chemicals company is the worst-performer as its stock has fallen by more than 1.50%. Bayer’s stock has dropped by more than 37% this year and is the second-worst performer after MTU Aero. This weakness is because of the firm’s problems in its crop sciences division. Other laggards in the DAX are Delivery Hero, Henkel, Linde, and Deutsche Boerse.
DAX Index technical outlook
The hourly chart shows that the DAX index is in the red today. It reached an intraday low of €13,050, which is lower than yesterday’s high of €13,148. The price is between the 25-period and 15-period exponential moving averages and between the 61.8% and 78.6% Fibonacci retracement levels. This retracement connects the highest and lowest levels in September.
Therefore, I expect that the index will continue rising as bulls target the next resistance at €13,300. On the flip side, a move below the rising trend line will invalidate this thesis.