Profits since last Thursday, when the European Central Bank (ECB) decided to keep interest rates at zero per cent by the summer of 2019, have been completely eroded. Four main issues are affecting the DAX 30 right now. Firstly, after the futures expiry on Friday there is a lot of supply on the market. Next we have the recent escalation in the US-China trade dispute. Then we have the German political fiasco. Finally, Audi’s CEO has been arrested.
Futures Expiry
Triple witching occurs when the contracts for stock index futures, stock index options and stock options expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December. The period after triple witching is usually proceeded by profit-taking. This could be just one contributing factor to the current weakness on the DAX 30.
US-China
I am tired of talking about Donald Trump. But he has threatened China with additional punitive tariffs on $ 200 billion worth of goods should China actually implement the planned retaliatory tariffs on past US tariffs. The Beijing government talked about blackmail and announced countermeasures should the US put this announcement into place.
German Political Fiasco: CDU vs CSU
In Germany, the CDU-CSU dispute over refugee policy raised additional doubts about the future of the grand coalition. Although the asylum dispute is not threatened with a government crisis, greater political uncertainties in Germany would nevertheless be poisonous for the stock markets. Merkel herself had suggested last week to wait for the EU summit. On 1 July, she wanted to inform the CDU top committees about the state of their negotiations on agreements with countries affected by migratory pressure, such as Italy. Then it will be decided how to proceed.
Audi
Following the arrest of Audi CEO Rupert Stadler, the Supervisory Board had not yet taken any decision on possible personnel consequences on Monday after several hours of deliberations. Earlier, insiders had said Audi sales director Bram Schot should temporarily replace Stadler. Not great for them, or the car industry in Germany.
19-06-2018 Dax Technical Analysis
These are the charts from the webinar this morning. Be sure to join us at 8:30 am to discuss the charts in more detail. Find the link to the webinar in the Telegram Channel.
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