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The DAX is trading at 9511, down 1.7% as political uncertainty in Ukraine has sparked fears of clients withdrawing funds from banks in the former Soviet state.
Even though Ukraine is not a member of the EU, eurozone banks will have exposure to the country in the form of loans. Russia has put its military on high alert in response to the situation and the US has warned that any military intervention would be a ‘grave mistake’.
German unemployment dropped by 14,000 in February. This was more than expected but had little impact on equities in the country, as the situation in Ukraine is getting more exposure. The financial markets do not like uncertainty; investors have begun to take cash out of European equities and invest in safe-haven assets like gold.
The DAX is trading below the 50-, 100- and 200-day moving averages, and the relative strength index is indicating it is in oversold territory. In my experience, panic-selling will continue, and if we breach the 9500 level we could go much lower as long as tensions in Ukraine remain high.