DAX starts key week with a stall

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By :  ,  Financial Analyst

A light fillip to risk from China’s stimulus tweak was short-lived

In Europe, the latest soft print of German data (imports and exports fell hard in February) set the tone, tilting  sentiment to the cautious side. The backdrop is U.S.-China trade talks that ended on Friday with progress but no conclusive deal. Discussions are scheduled to continue this week.

Key risk events:

  • Markets price almost zero risk that the EU won’t grant the UK another extension when the bloc meets on Wednesday, the key uncertainty being how long
  • How Mario Draghi reiterates downside risks at the ECB’s press conference on Wednesday will establish whether they’ve worsened or improved. Fine LTRO/rate details aren’t expected till June
  • FOMC minutes (Wednesday) may hold clues on balance sheet reduction and any members leaning towards a cut
  • Macroeconomic highlights: U.S. inflation and UK growth data on Wednesday; China’s trade and inflation readings on Thursday; Germany’s final CPI on Friday

Germany’s DAX stalls at 2019 highs

The index is navigating back to a multi-year rising trend smashed at year-end. Right now, exhausted momentum leaves price in poor shape to tackle sensitive levels:

  • The critical 61.8% (12289) interval of the decline from January 2018’s record high to December’s bottom
  • 12046: 10th September’s high that preceded volatility before a modest advance
  • Current consolidation puts 11950 September lows at risk; before flimsy-looking 11903
  • March 2018 swing lows, particularly near 11250, are visually the most solid
  • Selling could still test the lower wall of a channel sketched since January, eyeing 11400s
Related tags: Fed FOMC May China ECB CPI Brexit

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