CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

DAX forecast: German carmakers hit amid weak Chinese demand

Article By: ,  Market Analyst
September 20, 2024 4:03 PM

The German DAX index hit a fresh record high on Thursday in the aftermath of the Fed’s dovish rate cut, which lifted global indices. However, it looks like investors are making a more sober assessment of the Fed’s rate cut today, especially outside of the US markets. Investors are realising that perhaps the optimism was exaggerated, especially with concerns about growth in Germany and China being at the forefront of investors’ minds. Today’s drop in the German luxury auto sector underscores those concerns, ahead of global PMI data. Concerns over the escalation of the middle east situation further hurt sentiment in Europe. Still, the DAX forecast is not completely bearish yet given that we have only just hit another record high this week. Bearish speculators will be in need of some downside follow-through to grow in confidence that at least a short-term top is in.

 

 

 

 

German car markers plunge to dent the bullish DAX forecast

 

Indeed, the German and Chinese economies are struggling and today we saw more evidence of that with Mercedes-Benz Group shares taking a big tumble to record their largest drop in four years due to a worsening slowdown in China, leading the world's top luxury carmaker to lower its forecast.

Mercedes-Benz shares plummeted by more than 8% in Frankfurt, marking the biggest intraday fall since 2020. The profit warning from Mercedes also impacted the broader industry. BMW shares declined by more 4%, while VW, BMW and Porsche, all found themselves near the bottom of the index.

 

Looking ahead: Global PMIs due on Monday

 

The week ahead will be a quieter one after this week’s central bank action. Among the key data highlights will be the global flash PMI data from the UK, Eurozone and US, which will provide us a quick snapshot of the health of the manufacturing and services sectors, relative to the previous month. Eurozone manufacturing has been the weakest spot, leaving the services to do the heavy lifting. Any surprise improvement here should help support the euro, while recession alarm bells could go off again should we see surprisingly weak numbers.

 

DAX forecast: Technical analysis

Source: TradingView.com

 

Today’s unconfirmed bearish engulfing candle wouldn’t appease the bulls much, not when you have just managed to push the index to a new all-time. If the index closes around the current levels, we may see some downside follow through as disappointed bulls rush for the exits in early next week. Longer-term investors won’t be too bothered about today’s bearish price action, for as long as we don’t see significant follow-through that causes a major reversal in the trend. Short-term resistance is now the low from Thursday at 18760, followed by that 18930 zone. Short-term support comes in around 18600, marking the trend line, followed by 18,515. The bears will get interested if we get below the recent low of 18,187. If that level is crossed, the technical DAX forecast will turn bearish as we will have out first lower low in place.

 

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

 

How to trade with City Index

You can trade with City Index by following these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    • Open an account in the UK
    • Open an account in Australia
    • Open an account in Singapore

  2. Search for the company you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024