Germany's DAX 30 Index May Stumble Amid Climbing Coronavirus Infections

ASIA-PACIFIC RECAP

Asian equity markets rose during Asia-Pacific trade on the back of easing US-China tensions, as the Trump administration moved to reassure US firms that they can still do business on the Chinese mainland with the popular messaging app WeChat – owned by Tencent.

S&P 500 (SPX) futures rose alongside the Australian ASX 200 and Japanese Nikkei 225 index whilst the haven-associated US Dollar (UDN) and Japanese Yen (FXY) slid against their major counterparts.

Gold (GLD) drifted lower as US 10-year Treasury yields dipped back below 63 basis points.

Looking ahead, a relatively light economic docket may see investors begin to turn their focus to the upcoming Federal Reserve Economic Policy Symposium in Jackson Hole on August 27.

Germany's DAX 30 Index May Stumble Amid Climbing Coronavirus Infections

Market reaction chart created using TradingView

GERMAN COVID-19 CASE SURGE THREATENING DAX 30 BENCHMARK

The largest daily increase of Covid-19 cases in over 4-months is threatening to halt Germany’s nascent economic recovery, as the number of infections rose by 2034 on August 22, bringing the national total to 232,082. The number of fatalities increased by seven to bring the death toll to 9,267.

This recent surge may force Angela Merkel to reintroduce tighter restrictions, after the German Chancellor stated that “this is a trend that cannot continue and must be halted [as] at this point, there can be no further loosening of restrictions”.

Considering Europe’s largest economy weathered the initial phase of the virus better than a vast majority of its EU counterparts, a ‘second wave’ of coronavirus infections may take some of the shine off the German recovery and hamper the performance of regional risk assets in the near-term.

Germany's DAX 30 Index May Stumble Amid Climbing Coronavirus Infections

Source – Worldometer

In fact, the impact of the recent climb in case numbers is immediately reflected in local mobility data, with all three metrics – walking, driving and transit – noticeably retreating from their respective post-crisis highs set earlier this month. These declines would likely intensify in the wake of tighter restrictions.

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