DAX index spikes as Allianz share price lead; Lufthansa eyes revamp

The DAX index rose by more than 1.40% as investors focused on the eurozone recovery. The index is trading at €12,180, a day after it crossed the important psychological level of €12,000. All stocks in the DAX were in the green today. Similarly, other European bourses like the CAC 40, FTSE MIB, and SMI rose by more than 1%.

Lufthansa losses soar

Lufthansa share price rose by more than 1.76% even as the company reported a whopping $2.35 billion loss for the first quarter. The company attributed the significant loss to the grounding of its planes in response to the coronavirus pandemic. It also said that write-downs contributed to the losses. This is after it wrote-down €100 million from its catering unit, LSG North America and €57 million from Eurowings.

The firm made a profit of more than €342 million euros in the same quarter a year before.

In a statement, Lufthansa said that it will embark on a cost-cutting strategy in its bid to return to growth. This will include cutting thousands of jobs and its fleet. It has already reduced working hours of its 87,000 employees and canceled some of its projects.

The announcement came a few days after the German government agreed to a near $10 billion bailout for the company. It will now become its biggest shareholder and have a seat in its board.

Allianz share price rises

Another big gainer in the DAX index was Allianz, the global insurance firm. The shares rose by more than 3.7% as investors reacted to a new set of niche ETFs it launched. The firm launched the AllianzIM US Large Cap Buffer10 (AZAA) and AllianzIM US Large Cap Buffer 20 (AZBA).

The two ETFs will track the performance of the S&P 500 Price Index while protecting investors against the first 10% and 20% of losses if the index falls. While the ETFs will be relatively small, investors hope that they will bring in more assets to Allianz.

Gainers and laggards in the DAX index

The biggest gainers in the DAX Index are Muench Rueckvers, Infineon, BASF, Deutsche Bank, and Heidelbergcement, which rose by more than 3%. Automakers, which gained yesterday were also in the green with BMW, Daimler, and Volkswagen gaining by more than 2%.

Only Fresenius was in the red today, with its shares down by 0.56%. Other laggards were Deutsche Bourse, Vonovia, and Deutsche Post.

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DAX index technical analysis

The DAX index rallied for the third straight day, and is now trading at €12,222, which is the highest it has been since March 4. On the daily chart, the price is close to the 78.6% Fibonacci retracement level of €12,572. It is above the 50-day and 100-day exponential moving averages while the RSI has soared to the overbought level. Therefore, it seems that the momentum is on the DAX side, which means that it will likely move higher as bulls attempt to test the 78.6% retracement level of €12,572.

On the flip side, a move below the 50% retracement level of €10,888 will invalidate this prediction.

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