European markets wrap: DAX expected to slump on Wednesday
We examine the recent price action from a number of key European markets as well as look at where DAX futures suggest the German benchmark will open on Wednesday, 27 May.
European markets wrap
European markets followed Asian Pacific indices higher on Wednesday, Wall Street also rose, though the NASDAQ composite proved jittery.
On a more granular level, the Swiss SMI proved to be one of the worst performers, rising just 0.06%, the Italian FTSE MIB gained 1.50%, the French CAC 1.46% and the German DAX rose an even 1%.
Amongst the best performing German equities were Deutsche Bank, up 9.75%; Lufthansa up 6.83% and Continental, up 5.96%. By contrast, Deutsche Boerse, Merck and Fresenius Medical Care were the worst performing German stocks on Tuesday.
This caps off a strong period for the blue-chip German benchmark, posting positive gains during 7 of the last 8 trading sessions. Overall, at Tuesday’s close of 11,500 points, the German DAX sits significantly off the lows it recorded in March.
IG Senior Market Analyst Joshua Mahony, noted that much of the bullish price activity in European and US markets have been driven by optimism around the easing of lockdown measures. From a technical perspective, Mr Mahony noted that:
‘The DAX has reached the highest level since early March. The break through 11,342 brings a breakout from the consolidation mode seen since the beginning of April.’
‘It is difficult to know exactly where this rally ends, yet we do have to keep an eye out for the 61.8% Fibonacci resistance level at 11,592. For the bears, it is worthwhile watching to see if we get a bearish break below the 80 level on the stochastic oscillator.’
As of 2:40 AM (GMT+2), IG Markets data suggests that the DAX is set to open around 52 points or 0.44% lower.
US markets trade bullishly
Elsewhere, US markets posted mostly strong gains on Tuesday, with the Dow Jones Industrial Average rising 2.17%, the S&P 500 gaining 1.23%, while the NASDAQ Composite eked out a gain of just 0.17%.
Adding to the prospect of reopened economies, markets look to have been boosted by news that US biotech Novavax had started the first human trial of its Covid-19 vaccine. Unsurprsingly, the Novavax (NVAX) share price rose 4.43% on Wednesday.
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