DAX index
The DAX index rallied by almost 2% today as the market continued to react to the ECB interest rate decision. In this, the bank left interest rates unchanged and decided to add €600 billion into its original €750 billion program. This stimulus, together with the Merkel-led fiscal stimulus will help German stocks in the near term.
Deutsche bank is the top-performing stock in the DAX index today. Traders are ignoring the risks posed by the recently launched investigation into the bank’s dealings with Jeffrey Epstein, the disgraced financier. New York regulators are investigating whether the bank broke any law when dealing with the mogul.
This new investigation expands a list of problems facing Christian Sewing, the bank’s CEO. He is taking the bank through a restructuring effort that will see it cut thousands of jobs. At the same time, the bank is being investigated for its dealings with Donald Trump. On a positive note, the firm has been making millions of dollars from its Fixed Income, Commodities, and Currencies (FICC) trading.
Automakers slumped yesterday after the government avoided adding more incentives in its proposed stimulus package. Today, the companies are some of the best performing in the DAX index. Volkswagen, Daimler, and BMW are all in the top 6 best performing stocks today.
That is mostly because investors are excited about the emergence of China, which is their biggest market. In a recent report, an auto association in China showed that sales rose by 11% in May. At the same time, new car sales have reached last year levels. This growth is mostly because some buyers postponed their buying plans when the coronavirus started.
Others are buying private cars because they feel safe to be in a private car instead of public transport. Indeed, a report by UBS showed that 27% of the respondents said that the virus had incentivised them to buy a car. Indeed, German cars have been increasing their market share in China unlike those from the United States and China.
Another reason why automakers in the DAX index are gaining is that Germany has doubled incentives for buying electric vehicles.
The best performers in the DAX index were Deutsche Bank, Heidelbergcement, Volkswagen, Daimler, and Allianz. These shares have gained by more than 2%.
On the other hand, the worst-performers in the index are Beiersdorf, Infineon, and Vonovia.
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On the daily chart, the DAX index moved above the important resistance level at €12,572, which is the 78.2% retracement level. The price is also above the 50-day and 100-day exponential moving averages while the RSI has moved to 75. While the index is overbought, it still has a room to run because buyers seem to be in control. This means that it could attempt to retest the important resistance of €23,000.
On the flip side, a move below the €12,000 will invalidate the trend. This is an important support level that will indicate that there are more sellers in the market.