Despite declining German GDP, business confidence improves
At the beginning of today's session, we have seen different macroeconomic data from Germany with a different sign. Despite the fact that we are able to verify that GDP has suffered a setback, consumer confidence has been better than the expectations of the market consensus.
Specifically, we have been able to observe that German GDP has suffered a decline of 1.8% during the first quarter of the year, causing the interannual GDP to fall into negative territory to 3.4% compared with the same period in 2020.
This decrease can be explained by the restrictive and prolonged measures that Merkel's government took during the winter season to try to contain and halt the pandemic, which has produced a negative impact on consumption during the first quarter of the year, thus obtaining a result worse than expected by market consensus.
Such data contrasts with the positive results obtained in Germany in relation to present and future expectations, since the Ifo index of business confidence in this month of May has been established at the level of 99.2 points compared to the 98.2 points that was expected. In addition, the current situation indicator in Germany has also exceeded the market consensus expectations, reaching 95.7 points compared to the expected 95.5 points. Furthermore, the business expectations index for the next 6 months has also shown growth compared to the previous month, exceeding the expectations of the market consensus.
On the other hand, during yesterday's session we obtained several statements from some members of the U.S. Federal Reserve in which they were quite optimistic in relation to inflation, since they expect these price peaks to decrease over time as we overcome this bottleneck phase caused by the reopening of the economy. Therefore, it seems that the current monetary policy will continue to be maintained, which can support the evolution of the indices.
If we look at the H4 chart of the DAX30, we can see that since mid-April, the price has been following a lateral movement, from which it seems that we are exiting, after the price made a double bottom formation where a new bullish momentum began. This has led it to set new all-time highs after exceeding 15,510 points, which act as the first level of support.
At the moment, given that the price is trading far from its main support levels, we cannot rule out that the DAX30 will make some correction to its 18 session average to create a new impulse. The loss of this level could open the doors to a greater correction, but the bullish structure would not be in much danger, so long as the price maintains the levels of its red band.
Source: Admiral Markets MetaTrader 5. DAX30 H4 chart Data range: March 2, 2021 to May 25, 2021. Prepared on May 25, 2021 at 12:50 CEST. Keep in mind that past returns do not guarantee future returns.
Evolution in the last 5 years:
- 2020: 3.6%
- 2019: 25.48%
- 2018: -18.26%
- 2017: 12.51%
- 2016: 6.87%
With the Admirals Trade.MT5 account, you can trade Contracts for Differences (CFDs) of the DAX30 and more than 3000 stocks! CFDs allow traders to try to profit from the bull and bear markets, as well as the use of leverage. Click on the following banner to open an account today:
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst, Roberto Rojas (analyst), (hereinafter “Author”) based on their personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.