Dax Lower As Coronavirus Carnage Continues

Asian stocks sank on Monday and European stocks are heading for a lower start on the open, as countries across the globe adopt increasingly stricter measures to stop the spread of coronavirus. These very measures are threatening to overwhelm central bank’s efforts to cushion the economic fallout from coronavirus, increasing the prospect of a deep global recession.

A surge in the number of coronavirus cases over the weekend, in addition to US Congress failing to agree on an aid plan are contributing to another strong risk off session. In a taste of things to come, US futures hit limit down (pause in trading when futures fall 5%) in the Asian session as fear on unprecedented levels continues to drive trading.

Additional German stimulus
Last week the ECB stunned the markets with an announcement of €750 billion asset purchases, in Christine Lagarde’s “whatever it takes moment”. However fiscal stimulus across the region has been overwhelmingly national. Germany today is expected to agree on an additional €150 billion in fiscal stimulus. There had been criticism aimed towards the German government for doing too little to stabilise the country. However, over the past 2 weeks the German government has reacted swiftly and is thinking big.

Consumer confidence
Eurozone consumer confidence data will be in focus later today. Analysts are expecting confidence to drop to -13 in March, down from -6 the previous month. The data comes after last week’s German IFO business climate index fell by the most since 1991, as coronavirus crisis takes its toll on confidence.

Dax levels to watch
Dax futures are trading at 8540, as the index faces another drop lower on the open. The futures have picked up from the low overnight 8018, however are struggling with resistance at 8612/20.
Immediate resistance can be seen at 8612 (today’s high/ 50 sma & 100 sma on 1-hour chart). A move above that strong resistance level could see more buyers come in and open the doors to 8804 (high 20th March) before 9100 (100 sma).
On the downside support can be seen at 7990 (low 19th March) prior to historical lows of 7800 (low June’13) and 7600 (low April’13).

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.