DAX expected to extend gains following blockbuster Monday session

We examine the recent market moves from the DAX and other global indices, what likely drove this action, and where German markets may head next.

Markets rise, DAX a key performer

Global markets rallied hard on Monday after US-based biotechnology company Moderna reported ‘positive’ early-stage Covid-19 vaccine results and US Fed Chair Jerome Powell said that 'There's a lot more we can do,' 'We've done what we can as we go. But I will say that we're not out of ammunition by a long shot.'

The response from investors, traders and everyone in between was electric: with US and European indices recording strong gains. Asian Pacific markets also rose.

The German DAX was a particularly strong performer here, rising some 5.67% or 593 points, to finish out the session at the 11,058 point mark.

At the height of the Covid-19 sell-off, the DAX fell below 9,000 points.

On a more granular level on Monday, key German equities experienced strong gains: MTU Aero Engines soared 15.66% to €134.80 per share, Daimler rose 11.34%, while Deutsche Bank closed out the top three, rising 10.35% to finish out the session at €6.56 per share.

No members of the DAX 30 fell on Monday.

Looking forward at German economic releases set to take place this week: on Tuesday May data will be released on the ZEW Economic Sentiment Index and on Friday IHS will release its latest round of PMI data, also covering May.

As part of April’s PMI release, IHS Markit's Principal Economist, Phil Smith, said:

‘April’s PMI surveys reveal the full effects of the COVID-19 pandemic and subsequent lockdown on Germany’s economy, showing business activity across manufacturing and services falling at a rate unlike anything that has come before. Compared to a low of 36.3 during the financial crisis, the headline PMI’s reading of 17.1 paints a shocking picture of the pandemic’s impact on businesses.’

IG data currently suggests that the DAX is set to modestly rise on Tuesday, with DAX June futures trading some 43 points or 0.38% higher, at the time of writing.

Other key market moves

Further afield, US markets also rose strongly on Monday: the Dow Jones Industrial average was up 3.85%, the S&P 500 index added 3.15%, and the tech-focused NASDAQ Composite rose 2.44%.

Other key European Markets fared well but couldn’t outpace the gains of the German DAX yesterday. The Swiss SMI climbed 257 points, the Italian FTSE MIB added 549 points and the French CAC gained 220 points.

How to trade financial markets: long and short

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