Germany’s DAX 30 Index: German stocks gain despite sell-off in tech shares

• Tech shares weigh on German stock market on Wednesday.
• DAX closed eighth of past nine trading days up.
• Tensions between the USA and China weigh on stock sentiment.

A sell-off in technology stocks dragged on the German stock market on Wednesday. Nevertheless, the DAX closed the eighth of its last nine trading days in plus. However, the technology-driven TecDAX lost more than 2 percent in the wake of the sell-off on the US Nasdaq as tensions between the US and China increased due to the highly controversial security laws that Beijing plans to install in Hong Kong.

The German leading index DAX closed 147 points or 1.28% up at 11,652.40 points. It was the highest closing quoted since March 6, when the Corona crisis was approaching its peak. Despite today’s gains, the German stock barometer closed far from its daily high of 11,748.33 points. The daily low was marked at 11,513.65 points.

Old-Economy stocks gain, tech shares fall

Among individual stocks, cyclical stocks rose sharply: carmakers Daimler and BMW gained 9.30% and 5.63% respectively. The shares of the chemical giants Covestro and BASF also rose noticeably. They climbed by 6.39% and 3.77% respectively. 

Shares of Infineon were down in the meantime. Their stocks fell by more than 5% after the chip manufacturer decided to increase its capital by about 1 billion euros. This is intended to finance the takeover of the US chip manufacturer Cypress Semiconductor.

The shares of Deutsche Lufthansa were also under pressure. They had initially soared by up to 9 percent when hopes of a revival in European tourism and the rescue package from the German government led to new buying. However, the Group announced in the afternoon that a decision on the German government’s 9 billion euro rescue package had been postponed due to the conditions imposed by the EU Commission. As a result, the share gave back a large part of its gains. 

At the same time, the German government postponed a decision to lift the travel warning, which cost travel shares in particular a portion of their strong profits. TUI shares, which had gained more than 21% at midday, ultimately advanced by only a good 14%. The corresponding ETF, which tracks the performance of the European travel & leisure sector, the iShares STOXX Europe 600 Travel & Leisure, rose by 0.88%.

The TecDAX fell by 2.41% and closed at 3,096.98 points. The MDAX declined by 1.42%. Meanwhile, the SDAX rose. The index advanced by 0.72%.

Tensions between US and China dampen sentiment

Concerns about US-Chinese relations have put the brakes on the stock rally in Germany. President Donald Trump said that Washington would announce its reaction to China’s planned national security laws regarding Hong Kong before the end of the week.

The easing of the corona lockdowns as well as optimism regarding a possible vaccine against Covid-19 and the hope for a massive aid package by the European Commission drove the German stock market up significantly in the last few days. 

German DAX 30 key technical levels

From the technical perspective, the chart picture on the DAX stays bullish. The technical indicators such as MACD and RSI are still in positive territory on a daily and weekly basis. Resistance levels are at 11,678.70 (R3) and 12,106 (200-day line). Supports meanwhile are located at 11,490.27 (Pivot), 11,336.80 (10-day line) and 11,084.40 (10-day line).