China’s Trade Surplus Contributes to Recession Risks Weighing on Global Stocks

The gloomy economic outlook has overshadowed the relaxation of Covid restrictions in China, weighing on global equities. As major stock indices remain under pressure, Dax and Dow are trading lower while the FTSE 100 holds steady.

Despite Eurozone GDP figures surpassing expectations, a QoQ growth rate of 0.3% remains well below the previous 0.8% rise in Q2.

With China’s trade surplus for November printing at $69.84 billion (vs the $78.1 Bn forecast), declining exports and imports highlight the implications of strict Covid restrictions.

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Dax 40 Technical Analysis

As risk assets remain under pressure, the German Dax is currently trading 1.91% lower for the week after bulls failed to gain traction above 14591 (the 88% Fibonacci level of the 2003 – 2022 move).

After nine weeks of consecutive gains, a rejection of technical resistance has allowed bears to drive the major European stock index lower. With Dax futures reaching a high of 14618 last week, a small-bodied candle and a move lower could suggest bearish reversal potential if prices close the week below 14535 (the weekly close).

Dax 40 Weekly Chart

(Click on image to enlarge)

Chart prepared by Tammy Da Costa using TradingView

As the daily chart highlights the extended wicks that are indicative of firm levels of support and resistance, the current 14300 psychological level is assisting in capping the downside move. Meanwhile, if selling pressure continues to drive prices lower, a move below 14249 and below the November 15 low of 14145 could see Dax prices retesting support at prior resistance around 13970.

Dax Futures Daily Chart

(Click on image to enlarge)

Chart prepared by Tammy Da Costa using TradingView

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