DAX struggles to keep composure

Having given up just over 250 points in two days of trading, the DAX is battling to keep an even keel.

Deutsche Bank
Source: Bloomberg

After the dramatic events that transpired in Brazil last night, composure is not necessarily what you would expect from German traders this morning, so their efforts to halt the DAX’s collapse we’ve seen signs of over the last few trading days should be applauded. The Alcoa-inspired positive start to the day’s trading by US equity markets will also have added a touch of resilience to the German index.

Yesterday’s bank and airline selloff looks to have been a little overdone, as both sectors are at the forefront of the equity risers. It is hardly surprising that both Deutsche Bank and Commerzbank fell away, after rumours that they would be subject to US regulatory scrutiny following the $8.6 billion fine handed out to BNP Paribas last month. Although both German banks are likely to suffer some form of fiscal penalty, the figures are unlikely to be of a similar amount.

Deutsche Lufthansa is the biggest climber, having now decided to become more focused on the lower end of the market. Considering the transformation that Ryanair is in the process of, there may well be an opportunity to steal a march on Michael O’Leary’s airline.

The DAX had been approaching oversold territory and did break through the 50-day moving average, but it now appears to be finding a little support that only a close below 9750 is likely to threaten.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.