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  • DAX closes at highest level since 6th of March.
  • Lufthansa and Bayer lead the way in the DAX.
  • Ifo-Index: the silver lining in the German economy.

The DAX finished the first day of the week at its highest level since the beginning of March. The rally was supported by a better-than-expected Ifo index and reports from Berlin, saying that small and medium-sized companies will receive a monthly cash injection of EUR 50,000 until December in order to overcome the Corona crisis. 

DAX closes at highest level since 6th of March

Germany’s benchmark index DAX closed up 2.87% at 11,391 points, its highest level since March 6, 2020, jumping above the April high and the previous May high, pointing to further price increases. The next relevant resistance stands at the 100-day moving average at 11,623.44 points. To avoid jeopardizing the positive outlook of the German stock index, a slide below the recovery trend of mid-March at 10,591 points should be avoided by all means.

The rest of the German stock market also showed a positive trend: the MDAX rose by 2.02% to 25,085.86 points and the SDAX gained 2.12% to 11,153.70 points. The TecDAX rose by 2.17% to 3,155.21 points. 

The smaller German stocks have been supported by the fact that the German government is planning an aid package for small and medium-sized enterprises with fewer than 249 employees of 50,000 euros per month. 

According to the report, the ministry calculates costs of 25 billion euros by August. Further costs depend on the course of the pandemic in the fall.

The VDAX-NEW, the volatility barometer on the Frankfurt Stock Exchange, lost 6.89% to 31.90 index points. The German VIX is thus at its lowest level since the beginning of March.

Lufthansa and Bayer lead the way in the DAX

On the corporate front, the shares of Lufthansa and Bayer attracted the interest of investors. They rose by 7.49% and 8.39%, respectively.

Shortly before the close of trading in Frankfurt, the German Federal Minister of Finance, Olaf Scholz, announced that an agreement had been reached with Lufthansa on a rescue package worth 9 billion euros. The government hopes that this package will prevent a bankruptcy of the German airline, which has suffered from the lockdown measures to fight the coronavirus crisis. 

For pharmaceuticals giant Bayer, investors celebrated a report by the news agency Bloomberg that they had reached an agreement on a large portion of their glyphosate lawsuits.

Meanwhile, BMW shares closed in the red. They lost 0.15% in value.

Germany also saw its first IPO of the year. The Nuremberg data service provider Exasol went up 34.53% on the first day of trading. The stock, which is listed in the Scale growth segment, closed at 12.79 Euro.

Ifo-Index: the silver lining in the German economy

German investors welcomed the better-than-expected May Ifo Index on Monday. 

The business climate index calculated by the Ifo Institute recovered from 74.2 to 79.5 points. Economists had expected 78.3 points.

At the same time, business expectations recovered noticeably from 69.4 to 80.1. Expectations were also significantly outstripped here.

Meanwhile, the current situation was disappointing, deteriorating from 79.4 to 78.9.

“Today’s Ifo index echoes more real-time signals that economic and social activity has started to pick up significantly since the first lifting of the lockdown measures in late April”, said Carsten Brzeski, Chief Economist at ING, “Just to be clear, it is currently still impossible to measure the more permanent damage the crisis has caused and what its impact will be on future growth”.

On Tuesday, the economic calendar will feature the GfK consumer climate in Germany, while in the USA, attention will turn to the Chicago Fed activity index and the consumer confidence calculated by the Conference Board.

German DAX 30 key technical levels

From the technical perspective, the chart picture on the DAX is bullish. The technical indicators such as MACD and RSI are positive on a daily and weekly basis. Resistance levels are at 11,456.61 (R3), 11,623 (100-day line) and 12,106 (200-day line). Supports are at 11,885.63 (R1), 11,026 (pivot) and 10,904 (10-day line).

DAX Daily