DAX set for a soft open, European markets remain in focus
We examine the German benchmark’s recent performance, what’s driven that performance, and where futures suggest the DAX will open on Thursday.
European markets choppy following 750 billion deal
The German benchmark came off slightly on Wednesday, even as US markets rallied, with the DAX dipping 0.51%, or 67 points, to finish out the session at the 13,104 point level.
Mind you, over the last five sessions the DAX has risen strongly, up close to 2%, following news on Tuesday that leaders from the European Union had approved a 750 billion euro coronavirus stimulus package, aimed at helping countries recover from the covid-19 pandemic.
The deal, which has been in the works since May – will be made up of 390 billion euros of grants and 360 billion euros in loans.
European markets rallied modestly on Tuesday off the back of that news, with the German DAX rising 0.99%, the Italian FTSE MIB gaining 0.49%, while the French CAC eked out a gain of 0.22%.
DAX futures in focus
Speaking of these market moves, IG market analyst Kyle Rodda today said:
‘A high degree of focus remains on European markets currently, as traders continue to digest the implications of the EU’s new recovery fund. European stocks faded overnight, in what was a relatively light session in the continent’s markets.’
Elsewhere, Mr Rodda noted that ‘A rallying Euro appears to be creating a small headwind for European equities in the short-term.’
The euro (EUR/USD) has indeed rallied strongly over the last five days, up from 1.14 to 1.16 in that period. In the last three months the key European currency pair is up 6.91%.
At the time of writing, DAX futures were trading up 0.21% or 28 points, suggesting that the blue-chip German benchmark would open higher on Thursday, 23 July.
US markets rise, Tesla steals the show
Though European markets have proven choppy over the last few sessions, US markets, in particular the tech-heavy Nasdaq Composite, continue to rally strongly, even as US coronavirus cases continue to grow at an alarming rate.
Large-cap and often controversial automaker Tesla saw its share price bid higher on Wednesday after releasing its second quarter (Q2) results to the market. Here, Tesla reported total revenues of US$6,036 million, against total gross profits of US$1,267 million, on a GAAP gross margin of 21.0%.
Tesla was up 4.06% in after-hours trade on Wednesday.
At the time of writing US futures were all trading up.
Want to take a position in US or German equities, long or short?
Create an IG trading account or log in to your existing account to get started now.
IGA, may distribute information/research produced by its respective foreign affiliates 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.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. 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, and 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.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.