DAX poised for a strong start to Friday’s session

We examine what’s driving bullish market sentiment as well as where IG Markets data suggests the German DAX will open on Friday, 17 April.

Signs of optimism emerge

Key US indices put in a solid session yesterday, with the Dow Jones Industrial Average, the S&P 500 and the NASDAQ Composite all finishing out the session in the green.

Much of this optimism looks to be driven by news that a Covid-19 drug developed by US-based biotech Gilead Sciences had shown early signs of success, with a number of patients being treated with the experimental drug seeing rapid signs of recovery.

In response to this news, MarketWatch sensationally wrote:

‘Gilead stock pops in after-hours trading; experimental drug remdesivir is considered a front-runner in the race to develop a treatment for COVID-19 infections.’

The Gilead share price did indeed ‘pop’ in after-hours trade, rising as much as 16.41% – to ~US$89 per share, off the back of this news.

According to Bloomberg Data, Dow futures are currently pointing to a positive open.

DAX also set to surge

Off the back of these developments, as of 5:59 AM (GMT+2), IG Markets data is suggesting that the German DAX will open some 240 points or 2.33% higher on Friday, 17 April.

Yesterday though, the DAX proved more sluggish, rising just 0.21%, to finish out the session at the 10,301 point level, taking the German benchmark’s gains over the last month to around 17.84%.

Amongst that middling session, the best performing German equities were Deutsche Borse, Fresenius Medical Care and Merck; while MTU Aero Engines, HeidelbergCement and Allianz were the worst performing.

Commenting on these market moves from a technical perspective, IG’s Senior Market Analyst, Joshua Mahony, yesterday posited that:

‘A break below that 10,152 level would bring about a more bearish picture into play. Given that depth of yesterday's decline, there is a possibility that this is going to be a retracement move before we turn lower.’

Elsewhere, DailyFx Strategist Paul Robinson, said:

‘But for now, as long as the DAX stays above the lower trend-line then the trend still remains pointed upward in the near-term, and could still bring gap-fills over 11k into play on further strength. A resolution one way or another appears to be nearing.’

Global markets in focus

Besides the German DAX, other European markets notched up a middling session on Thursday, with the Italian FTSE MIB gaining just 0.29%, the Swiss SMI rising 1.28%, while the French CAC fell 0.08%.

When Asian Pacific markets opened this morning they look to have benefitted from the optimism swirling around Gilead’s experimental Covid-19 drug, with the Australian ASX 200, the Chinese China A50 and the Japanese Nikkei 225 all rising.

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