The DAX index is up by more than 1.75% in the futures market ahead of key corporate earnings data from Germany. The blue-chip German index is trading at €12,700, which is the highest it has been since October 20.
Key earnings ahead
The DAX is rising in early trading as traders wait for earnings by key companies in the index this week. The key constituent companies that will release this week are engine-maker Adidas, sporting goods retailer Adidas, and Henkel, the maker of Persil. Infineon, a leading semiconductor company in Germany will also release their earnings.
These results will be closely-watched because they will be a signal of the health of the German and the global economy. That is because most of these companies make most of their money abroad. For example, the United States is the biggest market for Adidas and Siemens. Also, they are all seeing rapid growth in Asian countries like China.
Global equities rally
The DAX index is rallying in part because of the overall performance of world equities. In the United States, the Dow Jones and other indices have risen by more than 1%. Similarly, in Asia, it is a sea of green with most indices, including the Hang Seng, Nikkei 225, and Shanghai composite are all up by more than 1.75%.
That is because of the upcoming regime change in the US. Investors believe that the incoming president will have a global view of the world economy, moving away from Trump’s America First policies. For Germany and other European countries, investors believe that relations will improve. For example, the likelihood of a tit-for-tat trade policies has dropped to zero.
German DAX technical outlook
On the daily chart, we see that the German DAX has formed a V-shaped recovery after it dropped to €11,320 last week. It has also been in the green in six of the past seven days. Also, it is above the 50-day and 100-day moving averages and is slightly below the September high of €13,457.
Therefore, it seems like bulls have the momentum, which will see them attempt to cross this resistance. On the flip side, a move below the psychological level of €12,000 will invalidate this trend.
DAX index technical chart