The DAX index turned cautiously higher as investors pinned their hopes on a coronavirus drug as cases rise globally. The index is trading at 12,144 euros as traders continue to anticipate that a new drug will help stem the coronavirus pandemic. Most companies in the DAX index are in the green, with only a handful in the red. Elsewhere in Europe, the FTSE 100 and CAC 40 are unchanged while Stoxx 50 is up by just 0.15%.
German stocks gain as coronavirus cases jump
Global coronavirus cases jumped to more than 10 million while deaths rose to more than 500,000. Most of these cases and deaths are from the United States, where infections rose to their highest level since the pandemic started. In the US, the health secretary warned that the window to halt the disease from spreading was closing. That was the biggest warning from the Trump administration a few days after the CDC warned that total infections was more than 20 million. He said:
“We have to act, and people as individuals have to act, responsibly. We need to social distance, we need to wear our face coverings.”
The rising cases in the United States is a concern for companies in the DAX index because most of them do a lot of business in the country. For example, the US is the biggest market for companies like Daimler and Volkswagen.
Perhaps, the index is gaining because of a new drug that has been approved in China. It could also be rising because of the upcoming meeting between Emmanuel Macron and Angela Merkel to fast track the recovery fund.
DAX index top movers
The biggest gainer in the DAX index is Wirecard, the bankrupt payment company. The shares have jumped by more than 85% as some traders make bets that some investors will scoop some parts. MTU Aero, Covestro, Daimler, Merck, and E.On are the other best-performing stocks in the index.
On the other hand, Lufthansa is the worst-performing stock in the index. It is down by more than 3% as investors fear that travel will take time to recover. In a report, the EU has excluded the United States from the list of approved countries. Other weak performers are Beiersdorf, Henkel, and Deutsche Telekom. Beyer and Deutsche Post have also underperformed.
The DAX index is trading at €12,090, which is sill lower than June’s high of €12,916. On the daily chart, the price is slightly below the 200-day exponential moving average and slightly higher than the 100-day EMA. The price is also above the 61.8% Fibonacci retracement level and slightly above the psychologically important level of €12,000. The index may continue moving lower as bulls attempt to test the 61.8% retracement at €11,578.
On the flip side, a move above €12,400 will invalidate this prediction. This is an important resistance level, which is close to the June 23 June high of €12560.