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  • The German benchmark index DAX closes slightly lower.
  • Sentix index shows green shoots in the economy.
  • Wirecard with strong turnaround after sell-off. 

The German benchmark index DAX closes moderately lower on Monday. A combination of profit-taking, weak German industrial data and disappointing trade figures from China weighed on the risk appetite of investors in Frankfurt. 

The DAX fell 0.22% to 12,819 points. Despite today’s pullback, the overall chart reading for the German stock barometer remains bullish. It has risen by more than 10% since the beginning of the month and is now above its important 200-day moving average line, which currently stands at 12,128 points. 

Sentix index shows green shoots in the economy

Meanwhile, hopes for a rapid return of German economic output were strengthened by the economic index calculated by Sentix, which recovered from minus 41.8 in May to minus 24.8 in June. At the same time, the expectations component shot up to its highest level since November 2017, which Sentix CEO Manfred Hübner sees as a sign that “the economy is waking up from its slump”.

Also the US labour market report from the USA last Friday provided support to the DAX, which showed a surprising increase in jobs as of May. The unemployment rate also fell unexpectedly. This further fuelled economic optimism.

Unfortunately, German industrial production in April came in worse than expected and nearly doubled the contraction seen in the prior month. Nevertheless, economists expect a gradual recovery of industrial production in Germany from here on. However, a requirement for this to happen is that a second wave of coronavirus can be prevented, Capital Economics said in a note.

“However, even with the government’s latest fiscal stimulus, domestic demand will probably remain sluggish and external demand will be even weaker given that the rest of Europe will be even slower to get back on its feet”, said Andrew Kenningham, Chief Europe Economist.

Lufthansa leads — Wirecard with strong turnaround after sell-off

The MDAX lost 0.77% to 26,991 points and the SDAX fell by 0.28%. The TecDAX even corrected by 1.78% and ended the trading session at 3,193 points.

The top performers in the DAX today were the shares of Deutsche Lufthansa, which continued to benefit from the announcement that the airline will partially ramp up its flight operations again from 15 June. The shares climbed by 7.95%. 

The stocks of Deutsche Bank, Bayer and E.ON also closed higher, rising by 3.80%, 3.61% and 2.74%, respectively.

Wirecard stocks managed the turnaround of the day. Initially, they had slumped by more than 7% due to a report in the Handelsblatt on Friday, which reported that the headquarters of the German payment service provider had been searched by the public prosecutor’s office and the police on Friday. The reason for this was the allegation of market manipulation in connection with two ad hoc reports before the publication of the KPMG report at the end of April. However, the accusation was directed against the Management Board, not against the company itself. Wirecard intends to cooperate fully with the authorities and believes that the incident will be resolved very soon. This matter has no impact on Wirecard’s operating business, the Group announced, reiterating that it does not expect any major deviations from the preliminary figures already reported when the consolidated financial statements are presented on June 18.

German DAX 30 key technical levels

From the technical point of view, the DAX is still bullish. Reverse signals are rare. However, the index has now reached a key threshold. To be more specific, this is the lower limit of the pre-corona crash levels at 12,900 points. Only a surge over this hurdle would clear the way towards the record highs that were reached at the end of February at 13,795 points.

DAX Chart

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