Dax Rallies As Chinse Manufacturing PMI Overshadows German Issues

Dax rallies on Chinese data. Will it break out above 13300?

The Dax rebounded on Monday as traders focused on strong data from China which boosted risk sentiment and overshadowed data showing the German manufacturing sector remains deep in recession

The recovery in the Dax follows on from gains in Asia as investors cheered better than forecast Chinese manufacturing data. The Chinese Caixin / Markit manufacturing purchasing managers index rose to 51.8 in November up from 51.7, the fastest expansion since December 2016. The data eased fears surrounding the slowing of the world’s second largest economy amid the ongoing US – China trade dispute.

Trade 
Regarding the ongoing trade talks, investors stuck with bets that the US and China would reach a trade deal sooner rather than later even after Beijing insisted that trade tariffs would need to be rolled back as party of the phase one trade deal.

German manufacturing pmi
German manufacturing pmi showed the sector remains stuck in recession. The pmi increased to 44.1 in November, up from 43.8 last month, where 50 separates expansion from contraction. It was the second lowest reading since June 2009. Delving deeper into the figures and some concerning trends remain. New orders fell for a 13th straight month and factories slashed jobs at the fastest pace in 10 years.
Data at the end of last month showed that the German economy avoided a recession in the third quarter and consumer confidence increased. However, inflation for Europe’s largest economy dropped and retail sales also declined. It feels premature to be calling the bottom of this slowdown. More data is needed to confirm whether that has been hit and the German economy is slowly turn a corner.

German politics surprise
Dax traders will be keeping a close eye on the political landscape in Germany after results of the SPD leadership contest surprised. The SPD voted in leaders from the left wing of the party, replacing more centrist candidates. The SPD are the junior coalition party. The change of leadership is now likely to result in a change of policy which Merkel’s CDU/CSU will struggle to accept. Traders will keep a close eye on developments.

Levels to watch:
Following a strong rally in October the Dax remains in consolidation mode, with few attempts to break out of the current range 13100 – 13300. The Dax remains above its 200, 100 and 50 sma a bullish sign. We would want to see daily close above 13300 or below 13100 as an indication of direction.


Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.