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Coronavirus Crash: DAX & Euro Stoxx 50 in Freefall as Trump Address Disappoints

Coronavirus Crash: DAX & Euro Stoxx 50 in Freefall as Trump Address Disappoints

2020-03-12 09:00:00
Justin McQueen, Analyst
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DAX 30, Euro Stoxx 50 Price Analysis & News

  • Coronavirus Confirmed as a Global Pandemic
  • DAX | Aggressive Selling Persists, Focus on ECB
  • Euro Stoxx 50 | Critical Support Eyed as Sell-Off Intensifies

Global markets remain in freefall amid the ongoing spread of the coronavirus. Overnight, the World Health Organisation had labelled the virus as a global pandemic. Alongside this, US President Trump’s address had done little to provide confidence with the President stating that the US will suspend travel from the EU to the US for 30 days (does not apply to the UK), while also announcing relief measures. US equity futures are sharply lower this weighing with the Nasdaq futures hitting limit down. Subsequently, the deterioration in risk sentiment has spilled into Europe with oil prices and European indices extending losses with Airliners among the underperformers.

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DAX | Aggressive Selling Persists, Focus on ECB

Having broken below the 2018 low and the 10,000 level, the DAX is now trading at its lowest level since 2016 with a deleveraging in equity markets providing support to safe-havens (Japanese and US Treasuries). On Tuesday, we questioned whether the sizeable gains were merely a dead cat bounce, which had been subsequently confirmed after aggressive selling resumed. On the technical front, while the DAX may well be in oversold territory there is little in the way of notable support until we reach the rising trendline stemming from the global financial crisis low. Focus is on the ECB to provide stimulus in order to ease financial conditions.

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Germany 30 MIXED
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Change in Longs Shorts OI
Daily 8% 2% 4%
Weekly -25% 38% 6%
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DAX Price Chart: Weekly Time Frame

Coronavirus Crash: DAX & Euro Stoxx 50 in Freefall as Trump Address Disappoints

Source: IG Charts

Euro Stoxx 50 | Critical Support Eyed as Sell-Off Intensifies

The Euro Stoxx 50 remains under significant pressure, which has shown little signs of the slowdown abating. With support at the 2018 low pierced convincingly. Eyes are on critical support at the post-EU referendum low situated at 2653. Having bounced off this level, the Euro Stoxx 50 may have found an interim floor. However, given the aggressiveness of this sell-off risks and with little signs of a improvement in risk sentiment, markets remain tactically bearish. As such, a break below would confirm that a major double top and thus leave the index exposed to a test of 2500.

Euro Stoxx 50 Price Chart: Weekly Time Frame

Coronavirus Crash: DAX & Euro Stoxx 50 in Freefall as Trump Address Disappoints

Source: IG Charts

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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