Weak Fundamental and Coronavirus Fears Pressures DAX Index
Dax index gives up 0.60% at 13667 amid renewed concerns about the coronavirus outbreak. The reports from China now shows 14,840 new coronavirus cases in one day and 242 deaths. There are 60,342 confirmed cases, and 1,369 deaths confirmed while 6,074 patients have recovered. Yesterday the Dax index made fresh all-time highs on improved investors sentiment and a shift to risky assets amid optimism of a slowdown in coronavirus cases.
Macro data from Germany continue to disappoint investors. The industrial production dropped 3.5% in December, plunging the most since the global financial crisis. The figure is another reminder that Europe’s largest economy is far from overcoming the manufacturing recession.
Earlier reported that passenger car sales in China slumped 20% YoY in January. The lockdown of many cities in China seems to be the main reason for this weakness. This slowdown in car demand will also affect the German industry and auto manufacturers for whom China is an important market.
The yearly reading for Germany Industrial Production also was a big miss, as it came in at -6.8% below the estimates of -4%. The Factory orders in Germany dropped by 2.1% in December compared to November amid a sharp drop in demand from other nations in the EU. The reduction in December came after a 0.8% decline in November and a slight increase of 0.2% in October.
Meanwhile the EU Commission raised the German GDP forecast to 1.1% for 2020, 2021, while it keeps the Euro Area growth forecast at 1.2% for 2020, 2021.
Dax index takes a hit today from the recession fears amid the coronavirus outbreak and despite the fact that yesterday hit fresh all-time highs. The technical momentum is bullish for the Dax index but the fundamentals are not supportive.
On the downside, first support for the Dax index stands at 13647 the daily low. A break below would open the way for the next support level at 13555 the low from February 11th. Next support will be met at 13445 the low from February 10th.
On the other side, the initial resistance for Dax 30 index stands at 13,718 today’s top. Record high at 13758.70 is the next resistance area. A break above would target the 13900 psychological resistance.