Market News & Analysis


Top Story

Dax Drops As Fears Of Coronavirus' Economic Impact Grow

In line with other equity markets across the globe, the Dax is declining in early trade. Fears over coronavirus and its impact on the Chinese economy, global growth and trade have weighed heavily on sentiment. 

The number of cases of coronavirus in mainland China has outnumbered the infections in China during SARS in 2002/3. At that time Chinese GDP was at 11% and the economic impact of SARS knocked 2% off the GDP in the relevant quarters.

Evidence is mounting that the deadly virus outbreak is disrupting China’s economy. Economists have started slashing growth figures from 0.3% - 4% as authorities start restricting travel and lock down cities. Chinese New Year is usually a time of huge spending on travel, entertainment, dinning out and shopping. Many companies have suspended their operations and the Chinese will not be spending anywhere near the $145 billion that was spent around the last Chinese New Year.

China is responsible for 15% of global GDP. When China sneezes the rest of the world catches a cold. As we have seen with US – China trade dispute, declining global confidence and trade has the potential to hit exporter nation Germany hard.

German data
Data coming out of Europe’s largest economy this morning hasn’t helped ease the run on German stocks. Germany’s unadjusted employment rate rose in January, 198,000 higher than the previous month and 20,000 higher than a year earlier.
Investors will now look ahead to German inflation data. CPI is expected to decrease -0.6% mom in Jan. US GDP figures could also help drive sentiment. US economic growth is expected at 2.1%#

Chart thoughts
Dax has dropped over 1% breaking through its 200 sma on 4 hour chart. The Dax trades below 200, 100 and 50 sma on a bearish chart.
Immediate support at 13106 (low 8th Jan) prior to 12948 (low 6th Jan). On the flip side resistance is around 13350, (100 sma swing high 29th Jan), followed by 13430 (50sma) which could open the door to 13604 (high 24th January).


From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.