DAX Stabilising As Traders Asses Global Stimulus

After yet another historic selloff it the previous session, which saw equities, bonds and crude oil take a hammering as investors liquidated into cash, today is showing signs that the sell off at least could be slowing. European indices are pointing to slight dip on the open as investors assess stimulus measures from across the globe.

Last night the Reserve Bank of Australia cut its key interest rate by an additional 25 basis points to 0.25% and adopted a Japanese style yield control among a raft of other measures, to shore up the Australian economy.

The move came following the announcement of €750 billion bond purchases by the ECB, in a bid to stabilise the economy and capital markets. This is an all-in programme and Christine Lagarde’s “whatever it takes” moment. The Fed also said that it was launching a programme to support money making mutual funds after slashing interest rates to near zero at the start of the week.

Today attention will move to the Swiss National Bank, which has a strong currency and negative rates, a similar problem to Japan. With the rate already at -0.75% no rate cut is expected, although we could well see other tools being expanded.

Monetary & Fiscal Stimulus
Central banks have thrown what they have at the coronavirus pandemic issue. Governments have also been doing their part. Last night the US Senate cleared an economic relief package that will provide paid sick leave, food assistance and financial help for virus testing. The move came after the UK government pledged £330 billion to support coronavirus business.

Is it enough?
However, these pledges of support come as the number of cases continue to grow exponentially in Europe and in the US and as the governments also put in increasingly stringent measures in place to prevent the spread of coronavirus. These very measures will create a huge demand shock and eye watering levels of contraction. A recession is inevitable, the question is whether the fiscal and monetary support can prevent a depression.
The fact that the DAX remains in negative territory implies that traders are dubious over whether these moves are enough. However, the selloff does appear to be slowing suggesting that they are at least considering it.

Dax levels to watch
The Dax has opened higher on Thursday at 8464 although quickly gave up initial gains and is now down -0.5%. It continues to trade below 50, 100 and 200 sma on 4-hour chart.
Immediate resistance can be seen at 8707 (today’s high) prior to 9015 (high 17th March) and 9180. A mover above 9483 (50 sma) could negate the bearish trend.
Support can be seen at 9768 (today’s low) prior to 7730 (low 1st July’13) and 7655 (low 1st June’13).

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.