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Here’s Why the DAX Index Just Soared to a 2-Week High

DAX index
DAX index

The DAX index is up by close to 1% as investors remain optimistic about recovery of the European and American economies. The index is trading at €13,029, which is the highest it has been since September 21. Other European stocks are in the green, with the FTSE 100 and CAC 40 up by 0.25% and 0.63%, respectively.

The DAX index and other global indices are rising mostly because of the likelihood of a new stimulus deal in the United States. In the Fed minutes released yesterday, officials pressed the government to pass another stimulus.

They also said that they are exploring new ways to extend financial support to the economy. This could include boosting the amount of assets they are buying and the duration of these purchases.

A stimulus in the US would be a good thing for German stocks because of the relationship the two countries have. Indeed, German companies like Volkswagen and Daimler sell cars worth billions of dollars to the US every year.

The DAX index is also rising as investors wait for the minutes from the European Central Bank (ECB). Like with the Fed minutes, analysts expect that those from the ECB will signal that the bank is ready and willing to offer more support for the economy.

All companies in the DAX 30 are in the green today. The biggest gainer is BASF, the chemical giant whose share price is up by more than 3.7%. It is followed by MTU Aero, Fresenius, Continental, and Deutsche Bank. On the other hand, Daimler, Vonovia, and Adidas are the worst performers in the index.

Top movers in the DAX today

DAX 30 technical analysis

The three-hour chart shows that the DAX index has jumped to a two-week high of €13,029. This price is above the 25-day exponential moving averages. It is also along the first resistance level of the standard pivot points. This price is likely to continue rising as bulls aim for the next resistance and the previous pivot point at €13,170. Still, for today, I suspect that the price will remain near the current trading range. On the flip side, a move below the first resistance at €12,865 will invalidate this trend.

DAX index technical chart

DAX index