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Increased Risk-Appetite Leading DAX 30 Higher

Increased Risk-Appetite Leading DAX 30 Higher

Alejandro Zambrano, Market Analyst

Talking Points

  • The DAX 30 gains as global risk-appetite increases following Warren Buffett’s Berkshire Hathaway adding 9.8 million Apple shares to its portfolio.
  • From a technical point of view, the DAX 30 is bullish above the May 6 low of 9739, but price is also capped by the May 10 high of 10,111.
  • Eurozone Trade Balance surplus increased to €22.3b.
  • U.S. CPI and Industrial Production are on deck this afternoon.

The DAX 30 (CFD: GER30) was up by 1.56% at the time of writing from Friday’s close price. All sectors were higher on the day, but Materials, Information Technology and Telecommunication Sectors were in the lead. The overall bias was bullish for the European stock markets which where all higher. The business press says the boost to Apple Inc’s share price following the disclosure of Warren Buffett buying 9.8 million shares is what has triggered a boost to risk-appetite.

From a technical point of view, the DAX 30 is bullish above the May 6 low of 9739 as it is the most recent swing low of the series of higher swing lows formed since February. The sequence of higher lows is 8696, 9122, 9433, and 9739.

While the trend is bullish since February, the DAX 30 has been trapped between the May 6 low of 9739 and the May 10 high of 10,111 for more than a week, leaving the short-term trend neutral until a break to this range occurs. Resistance levels above the May 10 high of 10,111 are the April 29 high of 10,254 and this is followed by the April 21 high of 10,490. Support levels below the May 6 low of 9739 are the psychological level of 9500, followed by the April 7 low of 9433.

Our Stock Market forecasts for Q2 2016 are now live on the site. Download them for free.

DAX 30 | CFD: GER30

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Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano

The seasonally adjusted Eurozone Trade Balance surplus increased to €22.3b, which was higher than €20.2b prior and the €22b expected as per a Bloomberg News poll. While the Eurozone Trade Balance has steadily gained from being negative in 2011, the surplus has lingered around current levels since early 2015. The DAX 30 reacted by trading slightly lower right after the report was published. Since last year German Exports are higher by 1%, while Imports have increased by 0%.

This afternoon U.S. Consumer Price Index may rebound to the annualized 1.1% in April, while Core CPI may decline to 2.1% YoY from the 2.2% as per a Bloomberg News poll. The outcome may affect U.S. monetary policy and hence the mood of global stock markets. For more on this please read ‘EUR/USD to Mount Larger Rebound on Slowing U.S. Core CPI,’ by David Song, DailyFX Currency Analyst. U.S. Industrial production is also on deck.

--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com

Contact and follow Alejandro on Twitter: @AlexFX00

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

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