DAX, CAC 40 and SMI set for further volatility at the open

‘Never think that lack of variability is stability. Don't confuse lack of volatility with stability, ever,' Nassim Nicholas Taleb wrote.

DAX, CAC 40 and SMI pre-market data in focus

European indices have traded in a particularly volatile fashion in the last week – as investors struggle to price in the risk entailed by the coronavirus (Covid-19) crisis.

The current statistics indeed paint a bleak and exponential picture, with 244,805 reported cases of Covid-19 across the globe.

Even so, as of 4:23 am (GMT+1), IG Markets pre-market data suggests that the DAX will open 0.12% or around 10 points higher; the CAC 40 is slated to gain just 0.11% at the open, while traders expect the SMI index to open up 57 points or 0.77%.

Taking a step back, the last five trading days have proven especially messy for some of Europe’s most important blue-chip benchmarks: with the DAX, CAC 40 and SMI indices trading violently, up and down.

And though the SMI index – which tracks Switzerland’s largest and most liquid stocks fell sharply at the start of the week; over the last five trading sessions it has trended up positively overall. Yesterday the SMI finished out the session well in the green at the 8,782 point level, some 5% higher for the day.

Like the Swiss benchmark, the German DAX and French CAC also traded positively yesterday (up 168 points and 100 points, respectively); likely buoyed by news that the European Central Bank (ECB) would be kickstarting a €750 billion emergency purchase program, which would focus on buying private and public sector securities.

Like the ECB, the Swiss National Bank (SNB) announced that it would be ratcheting up its stimulus measures, noting that it would be taking steps to ease the current burden on the country’s commercial banks, with Swissinfo noting that:

‘From April 1, they will be able to hold 30 times more than their minimum capital reserves in SNB “sight deposits” before they are charged interest – up from the present limit of 25 times the minimum reserves.’

'In addition, the SNB said it may ease restrictions on how much capital banks must keep aside to cover potential mortgage loan default losses,’ also according to Swissinfo.

The SNB yesterday left interest rates on hold at -0.75%.

More broadly speaking however, unlike the Swiss benchmark – the last five trading sessions have been dominated by selling in the German and French markets – with the DAX and the CAC 40 both down around 10% and 9%, respectively.

How to trade global indices

You can use CFDs to trade a variety of global indices, including the DAX, CAC or SMI – LONG or SHORT through IG’s world-class trading platform now. For example, to buy (long) or sell (short) the DAX, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘DAX' or ‘Germany 30' in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

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