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DAX Lower As Coronavirus Carnage Continues

By City Index (Fiona Cincotta)Stock MarketsMar 23, 2020 05:04AM ET
DAX Lower As Coronavirus Carnage Continues
By City Index (Fiona Cincotta)   |  Mar 23, 2020 05:04AM ET
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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 below 8540, as the index faces another drop lower on the open. The futures have picked up from the low overnight 8018, however, they are struggling with resistance at 8612/20.

Immediate resistance can be seen at 8612 (today’s high/ 50 sma and 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).

DAX Chart
DAX Chart

DAX Lower As Coronavirus Carnage Continues

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DAX Lower As Coronavirus Carnage Continues

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