DAX rebounds over China speculation

The German equity has pulled back yesterday’s losses due to trader speculation that the Chinese central bank will inject cash into the domestic market.

The DAX is trading at 9337, up 1.6% as the recent run of poor economic data from China has triggered speculation that the People’s Bank of China will inject cash into the Chinese credit market after Monday’s announcement that  the HSBC Chinese manufacturing purchasing managers index dropped to an eight-month low. It is not unusual for Beijing to intervene by boosting domestic credit conditions.

The lack of news surrounding Crimea is also pushing equities higher; the EU and in particular Germany are heavily dependent on Russian natural gas and the threat that Moscow could reduce supply to the west is still in the back of traders’ minds.

As Brenda Kelly stated, the DAX is finding resistance at the 100-daily moving average of 9409, with support coming from the 200-hour moving average of 9190 If Beijing does announce a stimulus package, we could see the DAX retest the Crimea crisis highs.

Germany 30 chart

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