Early on Monday, the German DAX dropped below September/ October lows of 12,350 EUR and posted a new swing low of 12,250 EUR. Moreover, many bulls exited their positions below 12,350 EUR as stop-losses were hit.
It looks like the DAX might fall further, with the next target for bears set near 12,200 EUR and after that at the psychological level of 12,000 EUR.
Additionally, most of the companies in the DAX index are cyclical. That sector has been hit the hardest and businesses are going bankrupt. As there aren’t many technology companies in Germany, the whole index could remain weak amid the worsening COVID situation.
Earlier in the day, German IFO surveys fell, and the expectations gauge decreased to 95.0 in October, from September’s 97.4. The business climate indicator also slowed in October.
"Companies are considerably more skeptical regarding developments over the coming months," IFO President Clemens Fuest said in a statement. "In view of rising infection numbers, German business is becoming increasingly worried."
Coronavirus cases continue to rise dramatically across the old continent, which has already led to more lockdowns, curfews, and restrictions. That will surely hinder economic growth further.
Meanwhile, Nancy Pelosi said on Sunday that the president Trump and his administration are reviewing the latest proposal of the new fiscal stimulus by the Democrats. She expects a response today.
An agreement would be welcome by investors as a large portion of uncertainty would fade away. That could lead to a relief rally in equities. Until the fiscal stimulus is passed, stock prices might continue dropping.
✔️For more market news articles like this visit Axiory Intelligence.
Peter Bukov | Market Analyst
Peter comes from a background in corporate finance which began in 2013 when he completed the Corporate Finance Program at the University of Economics in Bratislava. He’s been actively involved in the market sector since 2008 and got his hands-on experience in trading in 2011.
His experience in finance and trading continues not only as a market analyst at Axiory Intelligence but also through his studies to obtain a degree in Capital Markets. The study is in line with MIFID II regulations and is under the supervision of the European Regulator ESMA, which strongly emphasizes ethics and morale in investing and working with a client.
In addition, Peter was awarded the title of ASCI from the CISI Educational Institute of England where he is an associate member and the Bloomberg Aptitude Test results ranked him among the top 4% worldwide two years in a row.
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