- The German DAX ended in positive territory on Tuesday, + 1.49% to 10,780.51, following upbeat Geran ZEW data and Sino/USD optimism.
- The pin bar on Tuesday’s close should be a warning to bulls.
European markets were turning around on Tuesday following a poor start to the week on fears that the US and China were about to go head to head over the recent arrest of Huawei Technologies’ CFO Wanzhou Meng on charges of violating the USA’s sanctions on exports to Iran. Such speculation sent global stocks off the edge at the start of the week, just several days after Trump and Xi had agreed to a cease-fire in the tariff wars at the end of last month’s G20 meet-up.
However, such speculation was brushed aside and instead, more positive news flows superseded China’s stark warnings to the US should Wanzhou Meng not be released. Officials from Washington and Beijing entered trade talks once again via a phone call between Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He, according to The Wall Street Journal. Bloomberg reported later that China was moving to reduce the tariffs which it had recently levied on imports of cars. President Donald Trump tweeted Tuesday that the U.S. was engaged in “very productive conversations” with China; This news set a positive tone for the European session.
In other news
- Market themes of the Day: The judgment day for the Brexit deal in parliament delayed indefinitely
Adding to the good-news wires, according to Italian daily La Repubblica, finance minister Giovanni Tria was trying to convince Rome to lower its target for the country’s budget deficit in 2019 to 2.0% as a proportion of GDP, versus the 2.4% goal initially tabled. However, Brussels was reportedly ready to accept a deficit goal of 1.95% of GDP.
As for data, the ZEW institute’s economic confidence gauge for December improved to a reading of -17.5 after a print of -24.1 for the month before.
Best and worst
Volkswagen AG-Pref + 2.38%. E.On SE +1.88% and Wirecard AG +1.83%. As for the worst performers, Fresenius SE & CO KGAA came in the worst, losing -1.56%, Vonovia SE followed, down -1.43% and Deutsche post AG-REG lost -1.33%.
DAX levels
- Support levels: 10615 10513 10441
- Resistance levels: 10887 10964 11202
While the index has managed to correct, supported by the doji, the pin bar on Tuesday’s close should be a warning to bulls although the close was positive and leaves the price action bullish. Daily RSI is turning positive and away from the 30 region and bulls can target R3 on a break of recent highs of 10887. The 50-D SMA at 11464 is a key upside level after a break of the 23.6% Fibo target at 11411.
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