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DAX futures: German index poised to fall on Friday

As Germany’s business activity grinds to a halt, we examined where the DAX 30 is set to open on Friday, 24 April.

German DAX: disastrous economic data at a glance

The DAX posted modest gains on Thursday – with the German benchmark rising 98 points, or 0.95%, to finish out the session at the 10,513 point level.

On an individual-company level, Wirecard rose 11.4% during the session, Continental gained 3.63% and Deutsche Bank added 3.49%; by comparison Vonovia, Infineo and Allianz were the worst performing equities.

This comes as business activity in Germany grinds to a halt due to the coronavirus pandemic, with IHS’s Flash Germany purchasing managers index (PMI) Composite Index hitting a record low of 17.1 in April – down from 35.0 in March.

'The biggest impact of the pandemic and associated containment measures continued to be seen across the service sector, where business activity fell at the fastest rate in more than two decades of data collection as around three quarter of firms reported a fall,’ said the IHS.

Manufacturing PMI fell to 34.4 (down from 45.4 in March); while Services PMI hit 15.9 (down from 31.7 in March).

As economic data around the globe continues to worsen, as of 2:36 am (GMT+2), IG data suggests that the DAX 30 index would open some 232 points or 2.2% lower on Friday.

Speaking of this recent price action, IG’s senior market analyst, Joshua Mahony yesterday said:

‘The DAX failed to break below the 10,152 support level on Tuesday, with the index maintaining the price action within its consolidation or topping zone. The breakout from this range should ultimately guide us in the direction of the next move.’

Mahony further stressed that 'with US markets providing a more bearish outlook, a follow up on those moves would likely drag European markets with it. In that scenario, the current rally looks like it could be a short-term retracement before we turn lower once more'.

Global markets in focus

Elsewhere, the CAC 40, FTSE MIB and SMI also posted middling performances – as volatility continues to flare across global markets.

The Italian FTSE MIB was the best performing index here, finishing out Thursday’s session up 245 points or 1.47%. By comparison, the SMI was the worst performing European index of the three, with the Swiss benchmark dropping 5 points or 0.05%, to finish out the session at the 17,011 point level.

Further afield, US markets also registered a lacklustre day, with only the Dow Jones Industrial Average closing out the session in the green. This comes off the back of yet another round of worrying economic data from the US, with an additional 4.4 million Americans filing for unemployment, for the week ending 11 April.

Since the middle of March, total unemployment claims have now topped a staggering 26 million. At such levels, current data suggests that the US unemployment rate stands at around 20%, according to Bloomberg.

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This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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