The DAX actually closed at a record high price on Friday after the Kevin Warsh speech, but Frankfurt's paying for it on Monday as we dropped roughly 1%.
DAX
The DAX actually closed on a record high price on Friday after the Kevin Warsh speech, but Frankfurt's paying for it on Monday as we dropped roughly 1%.
There are some standout companies right now really bringing the index down. That includes a few such as Siemens Energy down about 5% on heavy volume, Rheinmetall is down 3.3%, Siemens itself is down 1.7%, Infineon is down about 1.5%. Some of the banks are a little bit soft, such as Deutsche Bank, but that's just 0.7% being lost for the day.
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Macro Catalysts and Support Levels
The market overall is still really looking at the overall trend as bullish, and I still believe that the 26,000 euro level is an area that could come into play for support. The 50-day EMA reaching there is good for technical traders, but let's keep an idea here that we also having to pay attention to oil. It has a major influence on Germany's industrial base; Germany does not have massive oil fields after all.
The bond yields are tracking the US yields; they look pretty much identical for the last couple of weeks. And really, at this point, the slightly stable euro also suggests that maybe exports might suffer.
Nonetheless, the German government is spending heavily on infrastructure and military spending, so I am still bullish on the DAX longer term. I look at this as a potential 1- or 2-day pullback, and a bounce could be enticing. This is a longer-term uptrend that I still believe in, but also recognize that the energy question is a major overhang in Germany at the moment, and it isn’t likely to be going away anytime soon at this point.
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